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Leanne Macardle

Freelance Contributor
Published: 30/01/2019
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The performance of your chosen pension funds can have a dramatic impact on the amount of money in your pot, and if those funds don't perform well, the value of your pension savings could suffer. It'll come as worrying news, then, to learn that last year the average pension fund saw its biggest loss since the financial crisis, with few funds reporting any sign of growth.

Downward trend

The data, taken from the latest Moneyfacts UK Personal Pension Trends Treasury Report, reveals a marked deterioration in pension fund performance during the final three months of 2018, resulting in the overall annual decline.

The figures show that the average pension fund suffered a fall of 7.3% during the fourth quarter of 2018, leaving pension funds down by 6.2% for the calendar year. Highlighted as being a more difficult investment environment – particularly given such widespread economic and political uncertainty – most pension funds struggled to generate positive returns during 2018, with only 9% of funds ending the year in positive territory.

This essentially means that the vast majority of pension funds would have seen a decline during the year, which could have had a knock-on effect on many people's pension pots. It marks a sharp deviation from recent years, too, as until last year, pension freedoms had only been operating within an environment of positive pension fund returns, with the average pension fund enjoying particularly strong growth in 2016 (15.7%) and 2017 (10.5%).

Average annual pension fund returns

Calendar year

% pension fund growth























Source: Moneyfacts UK Personal Pension Trends Treasury Report/Lipper Reports

"Last year's market downturn will increase the focus on the investment decisions being made by pension savers and drawdown investors," said Richard Eagling, head of Pensions at Moneyfacts. "The extent of the losses experienced by pension funds last year, combined with the return of greater volatility, raises the question as to whether pensions savers and drawdown investors will be sufficiently alarmed to adjust their investment strategies and reduce their exposure to stock markets. The other threat posed by falling pension fund returns is that it could undermine efforts to encourage greater personal pension contributions."

Have you checked your pension lately?

If you're concerned about the impact of falling pension funds on your own pension savings, now's the time to assess the damage. While pensions are a long-term investment and there will be ups and downs along the way, you should be regularly checking the performance of your pension. One bad year doesn't necessarily mean that all is lost, but if you notice a marked drop-off in the value of your pension over time, or hold consistently underperforming funds, then it could be time to take action.

However, given that only 9% of pension funds saw a return last year, it could be difficult to know which way to turn, which is why getting advice is essential. Seek the help of a professional financial adviser if you're in any way unsure of what to do next, and hopefully, you can bring your pension pot back up to scratch.


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