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What next for your pension planning? 7 steps to guide you

MoneyPlus Features Team

In recent weeks, any question involving the words ‘What next?’ has been pretty difficult to answer.

To add to the uncertainties we’ve faced about health, jobs, schools, and what to wear for office video meetings, financial markets have seen some alarming ups and downs. As a result, many people are understandably nervous about what this means for their pensions and investments.

So we’ve set out seven simple suggestions to help with your pension planning in these uncertain times.

1. Try to stay calm

When faced with difficulties, most of us want to do something. It makes us feel that we’re taking control. However, rash responses don’t always lead to the best long-term results.

Iona Bain, founder of the Young Money blog, explains: “We know that markets don’t go up in straight lines, that we have to expect volatility at some point and that it’s going to (even slightly) mess with our heads. That’s what riding the roller-coaster is all about – and who would jump off into the nearest bush on the first downward lurch?”

In other words, financial markets may operate on split-second trades and decisions, but you don’t have to. For anyone who’s saving into a pension plan and still has five to 10 years, or more, until they plan to retire, there’s no call for panic.

2. Think carefully before selling

As Holly Mackay, CEO of the independent consumer website Boring Money, points out in a recent article for MoneyPlus, “Few of us would sell our home at a discounted price unless we had to, so why do it with our investments?”

One potential problem with selling at a discount is that you lock in your losses. If you stay invested and markets do recover, so does the value of your investments. If you move into cash, you may miss out on that recovery.

3. Try to keep your emotions out of this

According to finance journalist Jeff Salway, “The investment guru Benjamin Graham said, ‘The investor’s chief problem – and even his worst enemy – is likely to be himself.’

“Graham was referring to the emotionally-driven kneejerk tendency to sell investments during times of turbulence, even though history shows that equities typically outperform cash over the long term.”

Let your head guide your decisions, not your heart or your ‘fight or flight’ reflex.

4. Think about diversification

Why? Because having a mix of investments can help cushion your pension savings from the worst of market ups and downs.

If you have a workplace pension plan, and you’re in the plan’s ‘default’ investment option, you may already be benefiting from diversification. These options generally include a broad mix of investments, as we explain in our article How long could this go on? Could I lose all my money?

But it’s still worth checking where your pension plan and any other investments that you have are invested, as part of your financial planning. For example, if your pension plan and ISAs all invest in the same type of thing (let’s say UK equities), your diversification may be more limited than you thought.

5. Be comfortable with how much risk you’re taking

Risk is a bugbear for many investors because it’s all about the unknown. Ideally, you’ll understand how much risk you’re taking with your pension investments and feel comfortable with it. This is particularly true when markets are turbulent, as they are at the moment.

Find out more about your attitude to risk with our risk questionnaire and find out more in our article I’m worried about my pension plan and investments – what can I do?

If you have a Standard Life pension plan, you can check the risk level of your investments by logging in to our online services or app.

6. Get to know your pension savings better

We’ve warned against rushing into anything, but don’t be so relaxed that you ignore your pension savings completely.

Money journalist and broadcaster Simon Read believes this is a good time for people to get up close with their finances. “The Covid-19 lockdown has left a lot of people with more time on their hands. Many have turned to crafts or cooking, but the sensible have sat down and used some valuable time to focus on finances.

“Freed from short-term distractions, we’ve all had time to think about what kind of life we want after the current crisis finishes. Money is an essential part of that thinking – save wisely now and you could give yourself financial security and freedom later.”

One element of your pensions homework could be to brush up on different types of pension. Rollercoaster markets can affect the value of ‘defined contribution’ pensions. But other types, such as ‘defined benefit’ (final salary) schemes and the State pension, don’t fluctuate in value in the same way.

Finding out how this all relates to you may be less instantly appealing than lockdown crafts or quizzes but it’s worth knowing. It’s your future, after all.

With Standard Life you can review and manage your pension plan and more by registering for online services.

7. Understand any furlough effect

If you’re currently furloughed and have a workplace pension plan, your employer should continue to pay into it, as long as you do too.

Although it may be tempting to pause your own contributions if your finances are stretched, do remember this would mean missing out on contributions from your employer.

Everyone will be facing their own set of circumstances though, so it’s a good idea to talk to your employer to find out where things stand for you.

There’s more information on how furlough, reduced hours or sickness could affect your pension plan in our Coronavirus FAQs.

If in doubt, seek advice

Just as with health matters, consider asking an expert to help you with any of these seven steps, or with your general pension planning. By marrying up the bigger investment picture with your own personal circumstances, an adviser could help you to answer the question ‘what next?’

You can also get information and guidance about how the impact of the coronavirus might affect your pension savings from the Pensions Advisory Service website.

That way, both your pension savings and your peace of mind could get a helping hand through these uncertain times.


The information here is based on our understanding in May 2020 and shouldn’t be taken as financial advice.

The value of investments can go down as well as up, and you could get back less than was paid in.

Standard Life accepts no responsibility for the information contained in external websites referred to in this article. They are provided for general information only.