Pensions experts have this week been widely lamenting the hit pension schemes have taken as global markets plummet.
Figures from the National Association of Pension Funds (NAPF) revealed that more than £120 billion has been wiped from the value of UK pensions in the past month.
Research by Towers Watson has found that the combined pension deficit of the FTSE 350 has widened by an average of £2 billion a day so far in August. The total deficit stood at £73 billion in 10 August, up from £52 billion at the end of June.
Pension scheme members would have been better off keeping their cash under the floorboards for the past five years rather than investing it, according to analysis by PricewaterhouseCoopers (PWC).
Figures from the accountancy firm stated that defined contribution (DC) pension pots would be worth no more than the cash contributions to them since 2006.
Its analysis also found that defined benefit (DB) pension scheme deficits are increasing and could force organisations to increase their cash funding.
Peter McDonald, chief actuary and partner in the pensions practice at PWC, said that apathy about pensions will only increase if employees feel their efforts to save for retirement are wasted.
He added: “The problem is not with pensions but ensuring staff get the right balance of investments so that they do what they are supposed to do, plan over the longer term, and are not overly alarmed by market volatility.
“Employers, trustees and pension providers have a vital governance and communications role to play here.”
Pensions and benefits provider Xafinity claimed that investment volatility is avoidable and that employers should be taking a more active stance ahead of auto-enrolment.
The provider warned that, while DC pension schemes offer significant flexibility to employees, this can be confusing and lead to inertia and a reliance on default investments.
Ken Anderson, head of DC solutions at Xafinity, said: “Focus should return to the design and regular review of appropriate investment strategies to give members the best possible opportunity of meeting their retirement goals, without exposing them to undue risk.”
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