Pensions, like any investment, carry some degree of risk. The value of your pension can go down as well as up. When considering these swings in value it’s important to think about your pension as a long-term investment.
Over the long term these swings in value usually iron out and return a profit.
During the 2008-2009 stock market crash the FTSE 100 (the share index of the top 100 companies listed on the London Stock Exchange) struck its lowest point in March 2009. Yet it came roaring back during the following decade and struck all-time highs in May 2018.
But you don’t need to buy during a crash to benefit from stock market growth. Going back to the mid-1980s, if you’d invested a pound in the UK stock market on any given day and kept it there for 10 years, 99% of the time you’d have made money – on average more than doubling it. If you’d invested for only 1 year and taken your money out, you’d have lost money over a quarter of those times.
So, if you plan on remaining invested for a long time, don’t worry too much about the short-term ups and downs of the market. The main point is to stay invested over the long term, so your contributions have chance to grow.
If you still have concerns about your pension it may be beneficial to speak with a financial adviser. They usually charge a fee for their service so bear this in mind before seeking advice. Another option is to visit a website like MoneyHelper that provides free advice.
What are the benefits of a workplace pension?
Your workplace pension is a great way to save for your retirement:
- All the contributions you and your employer make into your pension are tax-free
- Pension funds invest in lots of different assets and this helps spread risk while still targeting long-term growth. For more information about what your fund(s) invest in please see our fund factsheets
- The full state pension is only £179.60 per week (for the 2021/2022 tax year) so if you think you’ll need more money in retirement a workplace pension is a great investment