UK pension funds endured their worst-ever quarterly performance in the first three months of this year as the coronavirus outbreak devastated global stock markets.
The latest Moneyfacts UK Personal Pension Trends Treasury report shows that the average pension fund saw its value fall by by 15.2% in the first quarter of 2020.
This is the worst quarterly performance on record – surpassing the falls seen during the global financial crisis of 2008 – with only 11% of pension funds avoiding a loss.
The report also reveals that average annual annuity income fell by 6% to an all-time low in the first quarter, 1.7% lower than the previous record low experienced in October 2019.
“The coronavirus pandemic has had a devastating impact on potential retirement outcomes,” said Moneyfacts head of pensions Richard Eagling.
“The hope is that these will prove to be short-term shocks, but for those planning for retirement now and looking for a retirement income immediately, they present unenviable challenges.”
Many pension fund sectors recorded heavier losses, with UK Smaller Companies, UK All Companies and UK Equity Income funds suffering value reductions of 31%, 29.8% and 28.4% respectively.
Moneyfacts explained how an individual who had saved £100 gross per month into a personal pension for 20 years would have built up a final pension fund of £41,388.
Using this to take an income through an annuity at age 65 means that they will now receive just £1,663 per annum, down by 18.7% on the start of the year, and 14.4% lower than the previous all-time low in October 2016.
“UK pension policy has increasingly moved towards placing more onus on individuals to take personal ownership of their retirement finances in recent years and take on the risks associated with this,” Eagling continued.
“Unfortunately, recent events have shown how vulnerable they can be to major world events.”