Has your pension plunged in stock market turmoil? How to avoid creating real shortfalls

Sliding stock markets are no reason to sell out of your pension in a panic, says David Prosser

Financial Planning and pensions Piggy bank concept
(Image credit: Getty Images)

Don’t panic. That’s the message from financial advisers to savers unnerved by falls in the value of their pensions over the past week. The losses you have suffered are purely hypothetical, for now, at least. They are paper losses. Your pension is now valued at less than it was previously. You’ll only turn these paper losses into real shortfalls if you sell your pension investments. The temptation may be to move pension savings out of riskier assets into safer holdings, but that will mean crystallising your losses. It could also see you miss out on any recovery as and when the markets bounce back.

Instead, remind yourself that pensions are the ultimate long-term investment. If you have no plans to cash in any of your pension savings in, say, the next five to ten years – or even longer – you can afford to ride out the volatility. There is plenty of time for your pension savings to bounce back, as they did after the much steeper falls seen during the early months of the pandemic five years ago.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.