COVID-19 is having a widespread impact across all aspects of financial life, including retirement plans, says managing director of Newport-based Kymin Financial planners, Robin Hall.

The current global stock market turbulence will no doubt be concerning for anyone whose pension savings are invested during these volatile market conditions.

However, making decisions based on what’s happening in the short term can be risky. It might be tempting, for example, to move all your investments into cash or other lower-risk investments for a while – but in doing that, you might miss out on the point when the value goes back up, so you could lose out in the long term.

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It’s really important to remember that pension savings are for the long term.

If you’re young and currently paying into a workplace pension, then there is time for your pension pot to achieve growth over the long term and recover from the fluctuations currently being experienced in stock markets.

You shouldn’t be too concerned, as you have many years ahead of you, and this will provide time for markets to recover before you take your pension income.

If you’re older and closer to retirement, you may have seen your funds ‘lifestyled’. This means your pension will have been moved into predominantly less risky funds and invested in ‘safer’ places such as in cash, gilts or bonds, which are lower risk.

If you’re about to retire and were planning to buy an annuity, in March the Bank of England cut the base rate twice in just over a week in a further emergency response to the coronavirus pandemic, reducing it from 0.25 per cent to 0.1 per cent.

This has meant annuity rates have also fallen. An annuity is a type of retirement income product that you buy with some or all of your pension pot. It pays a regular retirement income either for life or for a set period. If you are thinking of securing an income by purchasing an annuity, the recent volatility shows the importance of gradually reducing the risk in your portfolio as you approach your expected annuity purchase date. Doing this provides greater certainty over the secured income you can expect to generate from your fund.

If we continue to see a protracted period of negative investment returns, and you’re already using drawdown or plan to move into drawdown soon, you might also want to avoid taking out any more than you need to while fund values remain depressed.

The more you can leave invested, the more you will benefit over time once there is a recovery.

Drawdown is a way of taking money out of your pension to live on during retirement, but you keep your pension savings invested when you reach retirement and take money out of (or ‘drawdown’ from) your pension pot. Since your money stays invested – and it’s usually in the stock market – there is the risk that your fund may fall in value. The upside is that investment growth can provide higher returns and see your pot continue to increase in value.

If you are still in the process of saving for your retirement (and if appropriate), now might be a good time to consider increasing your pension contributions if you can.

Even though your strategy may depend on the movement of the markets, increases in contributions over the long term can make a difference to the value of your eventual retirement pot.

Again, there is no need to panic – at this stage, we do not know what the long-term implications of coronavirus will be. We can help you see the bigger picture, weigh all your options and take a balanced assessment of your risks.

If you are about to retire, the amount of exposure you have will reflect both your attitude to investment risk and the time you have until retirement. So before taking any major decisions relating to your pension, take the time to get professional financial advice.