Pension blow for millions as £48billion is wiped off share values

21/06/2013

PENSION FUNDS lost billions of pounds yesterday as share prices around the world plummeted.

In London the FTSE 100 Index fell almost three per cent, wiping more than £48billion off the value of shares.

Analysts warned that pension funds, which invest heavily in the stock markets, would be badly hit.

The crisis was sparked by fears the US is set to halt its quantitative easing programme, which has been pumping billions of dollars into the economy every month.

Pensions expert and former Government adviser Ros Altmann said last night: “This is definitely bad news for anyone trying to cash their pension and buy an annuity in the immediate future.

“It is possible the markets will bounce back but if you don’t need to buy your annuity now the best advice could be to wait. What is happening here is that the markets have been sustained by the quantitative easing and they are afraid of losing it. But when the bubble bursts it could be worse than the problem it was trying to solve.”

Patrick Connolly, of Chase de Vere financial advisers, said: “My advice for someone planning to take out benefits from their pension fund soon is to hold off if they can. They might get a better deal if they wait for the stock market falls to be reversed.”

Tom McPhail, senior pensions analyst at Hargreaves Lansdown, said: “Any stock market movement of this scale in one day can cause alarm. But pensions are long-term investments so should be able to recover in time.