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Coronavirus: giant UK pension fund says it is protecting small savers

Patrick Collinson
Photograph: Joe Giddens/PA

In a rare piece of (relatively) good stock market news, the pensions of millions of small savers are not shrinking quite as fast as many might have thought.

The giant UK pension fund that looks after the money of 8.6 million automatically enrolled workers said the value of investments has fallen by 17.6% since the start of the year.

Nest, the National Employment Savings Trust, was set up to manage the pension savings of millions of mostly lower-paid workers. It acknowledged that while the figure will be distressing for savers, it is significantly less than the fall in the FTSE 100, which has been closer to 30%.

“Most of our members’ pots will not be experiencing the extreme stock market volatility that is being reported on the news,” Nest said.

Generally Nest only invests around 35% of new members’ cash into shares for the first five years, then moves that up to 55% as they go through their working life, before dropping that to 10% as they get closer to retirement. The rest is invested in bonds, property and cash.

Nest said members of its scheme who were close to retirement had only lost 0.6% of their fund since the start of the year, as most of their investments would have been moved out of equities.

Former pensions minister Ros Altmann has called for all pension transfers to be banned for six months.

“In the current market turmoil, it is impossible for trustees of pension schemes to be sure of the underlying value of the pension funds, or each individual’s share. Therefore, introducing measures to delay all pension transfers for up to six months would seem a sensible way of helping to stabilise pension schemes and allow time for a clearer picture to emerge.”