Whilst neither the Trustee nor the DHL Pensions Department can provide advice on what members should do, at times like this, our advisers have suggested we remind you of the following:
Your pension is a long-term investment
Most of you are many years from retirement and so are investing for the long term. Although, volatility in the value of your pension account can be unsettling, we would expect markets to recover in time. What’s more, if you’re paying into the Plan, your and the Company’s ongoing contributions will buy more units than before any falls in value, which could have a positive impact on the value of your pension account in the longer term, should investment markets recover as expected.
How the Lifestyle strategy supports your pension
Many of you are invested in the Plan’s default option – the DHL Lifestyle Annuity. If you are relatively close to retirement some of your investments will be held in the DHL Fixed-Interest Bonds fund. This fund is designed broadly to match the changes in non-increasing and fixed increase annuity prices, in order to give you some certainty over the amount of annuity (pension income) you can expect to get with your pension account. Whilst the value of the DHL Fixed-Interest Bonds fund has dropped over recent months, so has the price of annuities. In fact, the cost of a typical annuity is around 40% lower at the time of writing than at the start of 2022. Having said that, the speed with which events have happened in recent weeks and the uncertainty within the market may mean annuity providers are slow to respond with reductions in annuity prices, so if you are considering purchasing an annuity in the near future, timing could have more impact than we would have expected in the past, and you should consider taking financial advice or seek guidance from MoneyHelper on your options, in light of current market conditions.
If you’re in the Freestyle strategy
If you are making your own choice of funds through Freestyle, you can switch your pension account into other funds if you wish. However, we would encourage you to think carefully about switching out of a fund that has just fallen in value as you could then ‘lock in’ the loss that might never be recovered through an investment market rebound. You should ask yourself whether the timing is right, given current market conditions and consider speaking to a financial adviser.
It remains important to be aware of the risks from pension scams, especially in times of heightened uncertainty.
What should you do?
You do not have to take any action, if having read the above, you are comfortable with where your pension account is currently invested. However, it is important that you review your investment choices regularly to ensure they remain suitable. Things to consider include how far away you are from retirement, how much risk you can afford to take, your attitude to risk, what investment charges you are willing to pay and how you plan to use your pension savings when you retire. If in doubt, then we recommend that you take financial advice.
If you are close to retirement and thinking about accessing your pension account in the near future, we would recommend you seek regulated financial advice or guidance from MoneyHelper on the options available to you (including taking cash, buying an annuity or taking a transfer to access drawdown or deferring your retirement) and the impact of the current market volatility on this decision.
We must also conclude with the caveat that past performance cannot be relied upon as an indicator of future performance and there is no certainty that the investment markets will quickly recover from the recent falls.
