The global bond market sell-off is putting retirement incomes increasingly at risk, warns the boss of independent financial advisory organisation deVere Group.
Nigel Green, founder and chief executive, is speaking out after a reported USD450billion has been wiped off global bond markets in recent weeks, with another significant bout of turmoil experienced on Tuesday.
“It is still unclear whether we’re about to enter the end of the incredible three decade bond market rally – but what we do know is that the currently tumbling bond market is pushing company pension deficits even further into the red,” he says. “As such, the bond market sell-off is threatening the retirement incomes and ambitions of a large number of workers.
“So-called ‘gold plated’ final salary schemes, which already have record deficits, are being hammered further because these pension funds are typically largely or wholly invested in bonds as they are perceived to be less risky than shares.
“Many people with a company pension wrongly assume their retirement incomes are safe. Perhaps they were when they joined. But this isn’t the case today due to the skyrocketing pension deficits which are now being exacerbated by a volatile bond market.
“I would urge people to have their company pensions checked sooner rather than later. This is because it is likely that their values could fall further as most trustees have already made almost every change possible, such as raising retirement age and amending the amount of pension increases, yet the schemes remain extremely vulnerable.
“It is arguably more crucial than ever for pension members to understand exactly what represents a risk to their pensions and how these can be mitigated.”