Investment markets often rise and fall, sometimes quite quickly and sharply, in the short term. There were some high-profile examples of this last year, due to reasons including ongoing political and economic uncertainty, where stock markets experienced significant ups and downs. Towards the end of 2022, we also saw a fall in the value of government bonds (known as gilts).

While these periods of market fluctuation or volatility might seem concerning, keep in mind that it is a normal part of the investment cycle: it has happened before, and it will happen again.

What’s important is that we, as the Trustee, regularly monitor risks like these and ensure that the UKRF’s investments continue to be appropriate and perform as they should. For your DC savings, because it’s up to you to decide where to invest them, it’s also important to recognise how volatility affects you and what, if anything, you need to do to manage it.

If you’ve seen a fall in value of your DC savings as a result of volatility, any action you take will depend on when you’re planning to take them:

• If you’ve got a while to go: Remember that your DC retirement savings build up over many years and that markets do generally recover over time. Making short-term decisions in reaction to market falls, especially if you don’t need to, could have a negative impact in the long run. Instead, keep an eye on where you’re invested and make sure your investment choices are suited to your retirement aims and when you want to retire – particularly if you’re in a UKRF Lifestyle Fund (see below).

  Are you invested in the UKRF Lifestyle Fund range?

  One of the aims of Lifestyle is to invest in funds that are broadly aligned to the wide range of retirement options that are available as you move towards your target date (when you plan on accessing your retirement savings).

  If the target date we have for you is incorrect, you might be moving too soon or too late into funds that are more focused on your retirement options.

• If you're planning to take your DC retirement savings soon, your actions might be affected by how you want to take them. If, for example, you’re planning to buy an annuity (an income for life), the cost of annuities has fallen too – so you might still be able to afford a similar level of income with a smaller amount of DC retirement savings. If you’re planning on taking your retirement savings in other ways, like drawing down an income over time, you may still be invested for many years and so have time for the value of your retirement savings to recover. Please log in to your pension account to see the tools available to help you understand your options. There’s also free and impartial guidance available if you need it, including the government’s Pension Wise service for those over 50 – see more below.

Get help if you need it

If you are close to retiring or need help making your investment choices, we recommend that you get free, impartial guidance from MoneyHelper or speak with a financial adviser authorised by the Financial Conduct Authority to understand your options and ensure that any decisions you make are right for your circumstances.

Visit MoneyHelper if you need help finding a financial adviser or to access their free guidance. If you are over 50, you can also get free guidance through the government’s Pension Wise service.

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