UK pensions hit record low due to pandemic

Data from the latest Moneyfacts UK Personal Pension Trends Treasury report has revealed that that the average pension fund saw its value fall by 15.2 per cent during the first three months of this year.

This makes this period one the worst on record, even surpassing the losses seen during the financial crisis of 2008.

During the first quarter of this year, average annual annuity income fell by six per cent as well – 1.7 per cent lower than the previous record low.

Most of the pension fund sectors recorded heavier losses, including:

  • UK Smaller Companies (31 per cent)
  • UK All Companies (29.8 per cent)
  • UK Equity Income funds (28,4 per cent)

Moneyfacts head of pensions Richard Eagling, said: “The coronavirus pandemic has had a devastating impact on potential retirement outcomes.

“The hope is that these will prove to be short-term shocks, but for those planning for retirement now and looking for a retirement income immediately, they present unenviable challenges.”

Moneyfacts explained how an individual who had saved £100 gross per month into a personal pension for 20 years would have built up a final pension fund of £41,388.

If they were to take an income through an annuity at age 65 they will now receive just £1,663 per annum, down by 18.7 per cent on the start of the year, and 14.4 per cent lower than the previous all-time low in October 2016.

Richard Eagling added: “UK pension policy has increasingly moved towards placing more onus on individuals to take personal ownership of their retirement finances in recent years and take on the risks associated with this. Unfortunately, recent events have shown how vulnerable they can be to major world events.”

In light of this shock to the pensions market, it has never been more important to seek independent financial advice when making arrangements for your retirement to ensure your needs are met.

Posted in Business News, Latest News.