The UK pensioners, particularly those who are approaching retirement, feel the strain as global markets continue their unpredictable swings. Recent downturns in the stock market have caused urgent discussions in many workplaces. Many pension schemes are heavily invested in equity. How can we protect pensions against future shocks, is the question that everyone has on their mind.
Amy Knight, NerdWallet UK’s small business expert, discusses five strategies that can help protect retirement savings. She offers employers and employees actionable steps in times of uncertainty to reduce risks and increase long-term financial security.
Amy Knight, expert in small business at NerdWallet UK comments
The USA is a place that has historically been seen as a safe investment, and many Brits have enjoyed significant returns.
Investors may be unsure about the best place to invest their money after recent market losses.
The trade war has caused sharp drops in global stock indices including the S&P 500, FTSE 100, and Dow Jones. British pension funds that were heavily invested in equity suffered losses. However, these have since recovered after Trump announced the 90-day suspension of higher tariffs.
Employers should prepare themselves for a barrage of questions from anxious workers, particularly those nearing retirement.” Employers need to be prepared for an avalanche of questions, especially from workers who are nearing retirement .”
Tips to employers:
Create fact sheets for employees who are interested in their pension
“A simple guide to help employees find out about their pensions, reset their login credentials for the platform of their provider and check their monthly contribution could prevent your HR department from being overrun with questions.”
Take into consideration a salary-sacrifice scheme
Switching to a salary-sacrifice scheme can be beneficial for both the company and its employees. The employees benefit from higher pension contributions, without reducing take-home pay. And the company reduces its NICs liabilities, as salaries are reduced. The returns are still dependent on the performance of the market .”
Steps to calm anxious employees
Log in to your Pension Portal
“Whether your pension is in a self-invested pension plan (SIPP), or through an employer scheme, you can log on to the online platform of the pension provider and see how it’s invested.”
Consider your time horizon
Your age and the length of time you intend to work will determine when you need to start drawing your pension. You may be comfortable investing a large portion of your pension into equities if you have at least 10 years left before retirement. The risks are high, but the potential returns are also high. For those who are closer to retiring, it is a good idea to seek professional advice about how to change their investment strategy in order to reduce the risk of their portfolio and to protect their capital .”
Change your investment allocation
Avoid making hasty decisions without seeking professional financial advice. Do not make rash decisions without professional financial advice .”
The original version of this article Finance expert on how to protect workplace pensions in a volatile market appeared first on HR News.
