Expert Pensions

Retiring Now? Protect your Pensions During the Crisis

The COVID-19 crisis has taken everyone by surprise resulting in stock markets being significantly impacted. This is extremely worrying and stressful for all pension investors, both pre-retirement and post-retirement. It is highly recommended that you speak to a pension advisor and review your fund. Only then an appropriate investment strategy can be determined. Market downturns can also be a positive opportunity to enhance your pension investment value.

Approximately 62% of workers in Ireland are members of a Defined Contribution (‘DC’) pension scheme. This is where your contributions are paid into a fund that invests in the stock market. Funds typically achieve investment growth over the long term; however, in the short to medium term, the investment value can rise and fall due to global economic events such as COVID-19. The stock market has performed extremely well over the past 10-12 years whereby investments have achieved higher than average returns.

Here’s our advice for anyone who is Retiring ‘NOW’

  • Retiring immediately after a market downturn is not recommended as you might incur losses.
  • Examine the possibility of moving investments ‘In specie’ or as they were, into a post retirement contract so you don’t need to crystallise loses.
  • Given that you are now retiring, your pension fund most likely will have been moved into a low risk fund where there was little impact on your pension value
  • It is recommended that you speak to a pension expert to review your pension benefits and pension options.

Considerations

  • Deferring your desired retirement date if necessary. This will help you not having to access your pension benefits until your investment value has recovered.
  • Looking to see if an In Specie transfer is possible.
  • Living off other savings, investments or other income sources such as rental income will allow you to defer your retirement date and assist with the recovery of your pension.
  • Whether you need to draw on your pension benefits, living off your tax-free lump sum (25% of your retirement fund) is an option. Depending on the value, you can defer paying any income tax, allowing more time for the remaining pension balance to regain value.

Making premature decisions without knowing all your options can result in further negative impacts to your pension fund value. Expert Pensions will understand your overall circumstances, review your pension fund(s) and outline all appropriate options for your consideration.