As well as the potential health and social impact of the Coronavirus, many of you will have seen the daily news updates on how stock markets are reacting. In recent weeks we have seen hugely increased volatility, including some sharp falls in global equity markets.

Why are markets so volatile?

The investment markets don’t like uncertainty. Coronavirus has created a significant amount of uncertainty and could have a very large financial impact. For example, reduced demand for products and services, such as travel and hospitality, has already significantly impacted companies and productivity will be affected if large numbers of workers cannot do their jobs.

Markets were also affected during past virus outbreaks (i.e., SARS) but following a period of uncertainty, markets recovered. This is the most likely outcome for Coronavirus, but we don’t know how long this uncertainty will last or how long a recovery might take.

How is my pension affected?

As a member of the Scheme, you are likely to find that the value of your pension savings has fallen recently. Longer-term ‘growth’ assets, like equities (stocks and shares) and diversified growth funds are likely to have suffered significant falls. Other types of investment options, such as bonds or cash, are unlikely to have been impacted negatively to the same extent.

Seeing the value of your pension savings fall can be uncomfortable – particularly if you’re close to retirement, but there are a number of factors to bear in mind.

1. Your pension savings should be viewed as a medium to long-term investment. Equity markets have had significant falls in the past, for example following the 2008 financial crisis – but recovered afterwards.
2. Don’t panic – while it’s sensible to be aware of how your pension savings are invested, short-term decisions could make things worse over the longer-term by locking in losses.
3. If you’re invested in the Scheme’s default investment option, you will be invested in a Lifestyle strategy that aims to reduce the volatility of your savings as you get within 20 years of retiring. These strategies tend to invest more in bonds and cash or in a more diverse mix of investments and the move away from equities into these less volatile funds happens automatically so, if you are within 20 years of retirement, e.g., 45 years old or above you may be less impacted.
4. If you and/or the Company are contributing into your pension, where funds have fallen in value, you will be continuing to invest in funds at lower prices. This means that your contributions buy more ‘units’ than before (sometimes referred to as ‘pound cost averaging’).
5. If you and/or the Company are contributing into your pension, where funds have fallen in value, you will be continuing to invest in funds at lower prices. This means that your contributions buy more ‘units’ than before (sometimes referred to as ‘pound cost averaging’).
6. 5. We expect Aviva to continue to be able to offer a full service to our members, but if there are staff shortages then some requests may take longer to respond to than usual. Don’t forget you can access your own personal record to see the value of your investments or get pension estimates at Aviva.

What if I’m close to retirement?

How you’re impacted is likely to be influenced by how you’re aiming to draw your pension savings – whether you’re:

1. Aiming to draw it as a cash lump sum in the short-term.
2. Looking to leave your savings invested and draw an income over time.
3. Intending to buy an annuity to provide a guaranteed income.
4. Taking your savings through a mix of the above.

Unless you’ve made your own investment choice, your pension savings will be invested in the Scheme’s default lifestyle strategy which aims towards a cash lump sum outcome. Lifestyle strategies do vary depending on their objective but can provide some level protection in the period before retirement.

What do I need to do?

You do not need to take any action. This update is for information only. However, it is a good idea to regularly review your pension savings and to understand the options that are available to you.

It is always important to make sure that your savings are invested in a way that reflects how you intend to take your benefits (particularly if you’re intending to retire within the next ten years).

Also, think carefully about the right time to make any changes, taking financial advice if appropriate. Sadly, people will use opportunities like this to try and defraud people out of their hard-earned pension savings. You can find more information on the FCA website.

Where can I find out more information?

You can view your pension savings and see more information on the investment funds available in your personal account with Aviva. You will need your Aviva policy number to access your personal account, you can find this on any recent communication from Aviva.

If you haven’t registered to access your account with Aviva or are having trouble logging in please email babcock@aviva.com.

Where can I find a financial adviser?

The Trustee cannot give you financial advice. If you feel that you need further guidance on investing your funds, we strongly recommend that you speak to an impartial financial adviser. To find an impartial financial adviser, visit the Money and Advice Service.