Why Pensions are off to a Bumpy Start in 2022?

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February 09, 2022 - Furnley House

Why Pensions Are Off to a Bumpy Start in 2022?

For stock markets around the world it has been a bumpy start to 2022. US stocks fell in January with investors expecting interest rate rises and tensions between the US and Russia adding to the sense of uncertainty. This had a ripple effect through to the Eurozone and other countries where we saw share prices move erratically. It has been an interesting few weeks with some stock market highs and lows, and we could see more swings in the months ahead.

If you are approaching retirement, or if you are someone who keeps a regular check on your pension savings, you may have seen your balance go up and down more sharply and more often than usual, and you may be feeling a little unnerved.

Short-term fluctuations are normal with any sort of investment, which is why is it important to try not to worry. Pensions are long-term investments, designed with your retirement age in mind, and their funds are invested to weather these storms.

What’s happening to your pension?

Your pension contains lots of underlying individual investments and typically most of these are company shares. Company shares are traded on stock markets, and their value is influenced by all sorts of factors such as company performance, the local and global economy, inflation and interest rates.

When the outlook becomes uncertain and conditions change quickly, the more shares will probably move up and down in value. This is what we saw at the start  of this year and is reflected by pension balances going up and down quite rapidly.

Research by our team at our sister company Asset Intelligence shows that whilst it is likely to be a volatile year, the long-term outlook for investments is likely to remain positive. If you are concerned, speak to a financial adviser before making any changes as they will be able to advise whether the risk level associated with your portfolio is appropriate. Those who do make changes to their investment portfolio now could take the risk of locking in any losses.

Why the long-term outlook remains positive

There are lots of investment opportunities at the moment. However, the team of researchers at Asset Intelligence believe the following four reasons are important points to keep in mind.

  • Not all areas of the investment market are suffering to the same degree. In fact, value and cyclical stocks are fairing better than their fast-growing counterparts.
  • Interest rates are going up, but they are likely to peak at much lower levels than we have seen in the past, so we need to keep these rate rises in the context of where we are starting from.
  • Inflation is high, but it is likely to peak mid-year before falling back by some degree. High quality companies with strong brands have the ability to pass on price increases across to their customers, so goods will get more expensive. If you are holding cash savings, then it could be a good time to consider moving some of this money into an investment portfolio appropriate for your circumstances Whilst retaining sufficient monies for unexpected costs or emergencies.
  • There is good news – the pandemic appears to be in retreat thanks to the milder Omicron variant. Whilst Covid is unlikely to go away, many companies have found strategies to work through the pandemic, which means they are well positioned to face any future problems or

Approaching retirement? Don’t worry

If you are very close to retirement, then it is possible that your pension has been gradually moving away from company shares and into cash and bonds. This could mean that your pension balance might not have changed significantly. If you are unsure if your pension de-risks the closer to your retirement age, then speak to a financial advisers.

We are here to help

If you have any questions about your pension or any other investments you hold, or you are worried about the current stock market volatility, then we are here to help. You can get in touch by emailing our team of financial advisers at Furnley House, call 0116 269 6311 or email info@furnleyhouse.co.uk.


Past performance is not a reliable indicator of future performance.

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

All information correct at time of writing.