Clients on alert over pension losses as virus rattles markets

Mr Milton said clients facing this situation would have to be “flexible”. He said: “Pensions plans are not simply for ‘retirement’ but are part of a flexible armoury which may enable people to choose when they retire and how they do so financially. They need to buy time.”

Ricky Chan, director at IFS Wealth & Pensions, agreed the crisis could mean some people would not be able to retire as quickly as they had planned. He advised those already in drawdown to avoid crystallising losses.

The scale of those losses will also depend on how diversified an investor's portfolio is. Some diversification tools have been called into question by the current sell-off: gold has fallen more than 10 per cent in recent weeks despite being held as a hedge against equity market falls. Government bonds also struggled in the week ending March 13, but have since resumed their status as an asset class that moves inversely to shares.

Cautious model portfolios at advice firm Informed Choice remain 1.4 per cent higher over the past 12 months. Its moderate portfolio was down 2.4 per cent over the same time period.

Market commentators expect further falls for risk assets, with some calling for trading to be suspended entirely until a path through the pandemic emerges. But some advisers said market moves should not affect those with a solid financial plan in place.

Alistair Cunningham, director at Wingate Financial Planning, said: “If you have done the planning then this sort of event is part of that plan.

“We build our financial plans to take into account events like this. If somebody was going to retire but now cannot, they do not understand the risks of retiring and were not ready financially.”

Meanwhile Paul Stocks, director of financial planning at Dobson and Hodge, said the situation was a “little concerning” for some clients, but added that once their overall financial plan was emphasised, clients could understand the context and see why these events should not affect their plans.

Paul Gibson, director at Granite Financial Planning, said: “Our clients have an overriding financial plan in place and are invested in globally diversified portfolios so unless their plans change, we won’t be making any knee jerk changes.

“We always recommend that clients have an adequate emergency fund to draw on."

The Pensions Regulator has also flagged concerns over managing defined benefit risks and liabilities as Covid-19 threatens to impact pensions schemes.

TPR stated: “We expect trustees to have appropriate monitoring and contingency planning in place and to be alive to risks that would have significant consequences for their scheme and members.”

It urged trustees to identify, manage and monitor the impact coronavirus could have on meeting a scheme’s funding objectives.