The recent volatility in the stock market has highlighted the danger of staying invested in stocks and shares, also known as equities, in the months leading up to the date when you want to buy your pension annuity.
Most of us accept that in the long run equities can provide a better return than almost all other asset classes, but in the shorter term they can suffer from extreme volatility. This has been demonstrated over the past few weeks. The world’s stockmarkets have fluctuated significantly on the back of fears that the economic recovery is taking longer than expected and that certain western countries are struggling to repay their debt and may default.
How does the Greek debt situation or political squabbles over debt in the United States affect my pension you might ask?
Well, the simple answer is that, it is likely your pension has some exposure to these markets, and when they fall, so will the value of your pot, leaving you with less money to buy a pension annuity. Read more