As a result of economic output decreasing globally, it would be unlikely that pension values would not have decreased temporarily, so it is important to review.
Conversations about risk and return
This means some in-depth and perhaps even awkward conversations may need to be had in the near future.
For David Stevens, savings and retirement proposition director at LV, such conversations are a 'must have', rather than a 'good to have'. He says people's decumulation plans should definitely be reviewed in the light of the potential impact of a pandemic.
According to him: "One thing the pandemic has done is to impress upon everyone just how unpredictable life is and how volatile investment markets can be."
Robert Cochran, retirement expert at Scottish Widows, agrees: "It’s now more important than ever to check that retirement plans remain on track or if any changes are needed, particularly given the market volatility in the last year.
"Even if we were not in the middle of a global pandemic, reviewing retirement plans should regularly be carried out as personal circumstances and market conditions are highly likely to change."
This is a point emphasised by Sophia Dimitriadis, research fellow at the International Longevity Centre UK. "The pandemic has made it more important for people to review their decumulation plans," she says.
"Many people may have, temporarily at least, seen the value of their pension funds fall, while others may have been forced to save less for their retirement because of the economic fallout from the pandemic.
"This means that many individuals may need to save more or work for longer than previously planned to achieve their target retirement income."
Dimitriadis adds: "So it’s a vital time to rethink how this will affect decumulation plans on an individual level.
"Professional financial advice could have a key role to play here."
Cochran also recommends considering assessing other risks of accessing funds ahead of retirement, such as the longer-term implications of triggering the money purchase annual allowance on future pension plans.
There is also the risk that decisions might not take into account longer-term retirement goals and objectives as well as short-term needs. As a result, he also agrees the need for advice "has never been more evident".
The value of advice
Naturally advisers would agree about the role of advice in putting solutions in place to help forge a sustainable decumulation strategy.
Chan says: "For customers that are uncomfortable with volatile investment conditions, an adviser can help by sourcing low-volatility investment options to provide a return in line with expectations but minimising downside risk.
"For example, they can help a client pick the right type of smoothed fund to help ensure a sustainable income in retirement."
