Coronavirus Impact – Viewpoints of Investment Manager

You are not alone. Coronavirus is causing many investors extreme worry and uncertainty. The best thing to do is to seek expat financial advice in the UK regarding your pension and investments, so you can determine the best course of action. It also pays to know the viewpoints of investment managers particularly on longer-term investments like pension funds:

• Many are concerned that the Coronavirus may negatively impact the global economy, as they observe the significant decline of stock markets around the world. However, the falls should not affect the value of investments or pensions that are not heavily linked to those markets.
  
  
• Keeping your investments properly diversified around the world may offer protection against severe market crashes in a particular region. Investors may be affected by restrictions on travel and the supply chain due to the resulting falling prices, but that should not necessarily result in a long-term or medium-term slowdown. The Coronavirus may negatively affect demand for months, too, but the demand should return when the outbreak can be controlled.

• Having a good mix of assets across different geographies and sectors should prevent market volatility from harming your whole portfolio.

• The Bank of England is offering an emergency package of measures to counter the problems associated with cash flow in many households and businesses in the UK, while supporting the demand in our economy.

• A moderate pro-risk investment strategy may offer some comfort as favourable valuations for risky classes of assets, but it is still advisable to build resilience in your portfolio to protect against downward scenarios.

• You are likely to hear expat financial advice in the UK telling you to buy while other investors are panicking.

• It is risky to make long-term decisions based on short-term volatility. You may be tempted to withdraw your earnings, but this could put you at risk of missing out on the chance to earn more when the value increases again, and this could result in long-term losses.

Things You Need to Know About Defined Benefit Pension Transfer

When they retire as an employee, some individuals are members of a Defined Benefit (DB) pension scheme. Also known as a ‘final salary pension scheme’, it promises income payout based on your earnings when you retire. DB pensions are different from Defined Contribution (DC) pensions, as the amount you will receive at retirement is already guaranteed and paid directly to you.

You may want to consider a DB pension transfer if want to give up the benefits of the scheme in exchange for cash value, which you can invest in another type of pension scheme. Here’s what you need to know about transferring out of your DB pension scheme:

• What you cannot and can transfer: You will not be able to transfer your pension if you are in an unfunded public sector pension scheme. A DB pension transfer is possible if you are in a funded public sector pension scheme or a private sector DB scheme.
• How it works: If you decide that a DB pension transfer is best for you, the trustees running it will convert the benefits into a cash sum. Known as the ‘transfer value’, this can be invested in a pension scheme with a new employer, a stakeholder or personal pension, or an SIPP (Self-Invested Personal Pension). Keep in mind that not all personal pensions, SIPPs, and employer pension schemes will accept transfers, so check with them first.
• Beware of scams: Beware of claims telling you that you can transfer your pension for cash before age 55 and statements claiming that you can get more returns in a new pension scheme than your current one. In most cases, these are risky moves and are likely a scam. Keep in mind that you can transfer your DB pension to a new a scheme and receive cash out of the action if you are at least 55 years old or older.

The best way to go about a DB pension transfer is with the guidance of a regulated financial adviser. That way, you can understand the process of transferring your defined benefit pension, avoid the guesswork, and make an informed decision. Make sure that the financial adviser is credible and experienced, and that their practice is based on the Pension Transfer Gold Standard, so you can trust their ability to give suitable guidance according to your best interests.