Many of you have enquired about the impact of the Ukrainian crisis on your Plan pension. Typically, we have been asked two separate but related questions:
How much exposure to Russian, Belarussian and Ukrainian investments is there through the DHL funds?
At the end of February 2022, there was a very small level of Russian, Belarussian and Ukrainian investments within some of the Plan’s funds, including the DHL Lifestyle which 95% of members are invested in. Although the fund allocations vary by age, as an example, members investing in this strategy will have held no more than around 0.2% in Russian investments – that’s up to £2 for every £1,000 invested. The investment in Belarussian or Ukrainian companies was under 0.1% in total within the DHL Lifestyle.
A small number of members are invested in the riskier DHL Emerging Markets Equities fund which held around 0.93% in Russian investments. That’s £9.30 for every £1,000 invested. There was no investment in Belarussian or Ukrainian companies within this fund.
The fund manager has now valued the shares in Russian companies at zero, and so they are, in effect, no longer contributing to the performance of the DHL Lifestyle or the DHL Emerging Markets Equities fund. The DHL Lifestyle also has a very small holding in Russian, Belarussian and Ukrainian bonds. We understand that the Russian bonds are due to be removed from the index, and the fund, by the end of March.
What should you do?
It is important that you review your investment choices regularly to ensure they remain suitable. Things to consider include 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.
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.
What should I do about the recent investment market volatility?
The broader impact of the recent investment market volatility has been different for each of the Plan’s investment funds. 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 (in line with recent guidance from the Pensions Regulator on this topic):
Most of you are many years from retirement and so are investing for the long term. Although, this unwelcome volatility in the value of your pension account is unsettling, this may turn out to be just a short-term market reaction, with markets recovering in time.
The DHL Lifestyle (which 95% of members are invested in) is designed to automatically switch your savings into lower risk funds as you get closer to retirement. These lower risk funds provide some protection against short-term volatility like this. So, if your pension account is invested in DHL Lifestyle and you are closer to retirement, you will to some extent, have been protected against some of these market falls.
Some of you make your own choice of funds through Freestyle. If you’re one of those members, 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.
If you have seen a fall in the value of your pension account, there should be time to make up any losses unless you are close to retirement. What’s more, as the price of units in most of the funds has dropped as a result of the crisis, if you’re paying into the Plan, your and the Company’s ongoing contributions will buy more units than before the crisis which could have a positive impact on the value of your pension account in the longer term, when investment markets recover.
