Investment update - April 2025
11.04.2025
As you may be aware and heard in the press, the Trump administration in the United States of America have recently announced the introduction of trade tariffs, with other countries introducing their own tariffs in retaliation, which in the case of China in particular has then further escalated. As a result, stock markets around the world have become extremely volatile.
The impact this may have on your pension will depend on the type of pension you have and how close you are to retirement.
Defined Contribution Section members
If you are a member of the Defined Contribution Section, both you and the company pay a set level of contributions into your Pension Account while you are employed. These contributions are used to buy units in your chosen investment fund, which go up or down in value depending on the performance of your fund. When you reach retirement age, the value of your fund can be used to provide you with a cash lump sum, purchase an annuity (a contract with an insurance company that pays you an income for the rest of your life), or be used more flexibly (by transferring your benefits to a drawdown arrangement that would allow you to take a series of lump sums or a regular income).
It's important to remember that pension savings are a long-term investment. If your savings are invested in a Target Date Fund and you are in the early/mid-life stages of your investment journey, your fund will be invested in higher risk funds to achieve growth over a long period of time. In these stages you can expect to see movements in the value of your account day to day, but history has shown your fund is likely to increase in value over the long term.
If your savings are invested in other funds on the investment platform, the extent your funds’ value is affected by the recent market movements will depend on the type of fund you are invested in.
Even if you are close to retirement and invested in a Target Date Fund, while your fund will be invested in less risky funds to protect your fund value, it may still increase or fall in value. If you are considering taking retirement within the next six months, it's important you carefully consider the timing of when you disinvest your pension fund.
Defined Benefit Section members
If you are a member of the Defined Benefit Section of the Scheme, you will be provided with a certain level of income when you retire, based on the length of time you have paid contributions to the Scheme and your Pensionable Earnings close to retirement. Investment risk is borne by the Company, not you, and the Scheme is both well funded with a significant surplus and well hedged to protect the funding level. The pension you will receive at retirement, or already in payment, is therefore unaffected by the recent volatility in the market.
If you have made any Additional Voluntary Contributions (AVCs), as these are a defined contribution arrangement, these could be exposed to market movements as explained above.
State Pension
The State Pension is unaffected by fluctuations in the market.
Further information
The Trustees are in regular dialogue with their Investment Managers to continually review the current situation and take action if needed.
Unfortunately the pensions industry is continuing to find scams being reported. The Pensions Regulator has produced a leaflet which gives useful guidance on how to avoid scams.
The MoneyHelper service has also published guidance on their website to help you spot and avoid a pension scam:
https://www.moneyhelper.org.uk/en/money-troubles/scams/how-to-spot-a-pension-scam
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