Rossborough Financial Services has sent emails to all of its investment and pension clients, advising them to avoid liquidating their investments to reduce the long-term impact on their assets from ups and downs in the markets.
BWCI, meanwhile, said the impact of market fluctuations on individuals largely depended on the type of pension scheme they were in.
‘Ultimately, it depends on the stage where the pension plan member is,’ said Rossborough senior consultant Damian Wallen.
‘If you’re a long way from retirement, arguably this is a good thing.
‘There are still contributions being made, you’re buying stock low and will see the benefits when markets recover.
‘Throughout history, there have been lots of turbulent times for the stock markets and they always recover.
‘The issue is nobody knows how long this is going to take.’
Looking back at the banking crisis of the later part of the 2000s, he said it took about 18 months for markets to return to normal from the bottom of the crash.
However, people close to retirement or already drawing on their pension were in a challenging situation, especially if they did not have a detailed financial plan in place.
‘In the worst-case scenario, if someone lives a long time while continuing to draw from their pension, the funds could become de-minimis [insufficient],’ said Mr Wallen.
‘By all means contact us to review your investments to ensure that they align with your goals but stay on plan,’ said the company in its message to pensioners.
‘It is important not to let short-term financial market movements derail your long-term financial planning.’
Mr Wallen said it was important that people had a financial plan as it would give them ‘peace of mind during uncertain times’.
A BWCI spokesman explained that the impact of the market fluctuations would be different on different schemes.
‘If you are in a defined benefit scheme, then it is your employer who will be bearing the investment consequences,’ he said.
‘Provided your employer continues to fund the scheme adequately, your own benefits are protected.’
Many of these schemes were in surplus before US President Donald Trump imposed swingeing tariffs on countries around the world and then started unpredictably amending them within days.
The spokesman said those scheme surpluses were important because they essentially afforded extra protection from recent falls in investment values.
In addition, it could be years before most of a scheme’s assets would need to be sold, providing time for their value to recover.
But someone in a defined contribution scheme bears the investment risk themselves.
‘Since the scale of the movement varied by asset class, it is important to check where you are invested. It is the period to your target pension date that is crucial.’
He said that for someone with equity investments who was more than 10 years from retirement, there was plenty of time for the markets to recover. In the meantime, pension contributions would be buying equities at a reduced rate.
‘Closer to retirement, however, there may be insufficient time for equity markets to recover, and pension benefits may be lower as a consequence.’
One option could be to invest in bonds, which produced reliable, regular returns regardless of movements in their market value, and investing in them could provide protection for retirement benefits.
Some defined contribution schemes include a ‘lifestyle strategy', providing a steady movement from equities to bonds and cash in the years leading up the individual’s target pension date.
‘That is designed to be suitable, even in circumstances like these,’ said the spokesman.
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