Pension Freedom  

Pension funds suffer biggest losses since 2008

"Creating well diversified decumulation portfolios which also take into account the need for ongoing income and cash in retirement will help to mitigate volatility risk but for the vast majority, professional advice will be needed to achieve this."  

Steve Webb, director of policy at Royal London, said: "2018 has been a bruising year for investors who had previously enjoyed a couple of years of double-digit returns.  

"Drawdown investors who are withdrawing on a regular basis from their drawdown pot may need to review whether their current rate of withdrawal is still sustainable.

"Falling stock markets are also bad news for occupational pension schemes, although most defined benefit schemes will be investing increasingly heavily in bonds and will have limited exposure to UK equities. 

"As a result, these short-term fluctuations should not have too much impact on transfer values being offered to members to transfer out of their DB scheme into a defined contribution arrangement."

Nathan Long, senior analyst Hargreaves Lansdown, said: "The last three months of 2018 were horrible for pension savers, with falling stock markets having an immediate knock on to pension pots.

"It is important to remember that a pension is simply a long term savings plan, for anyone with a long time to retirement this is actually great news as their monthly contributions allow them to buy in on the cheap.

"Those closer to retirement, or drawing from their pension for income need to be a bit more careful.

"People drawing an income from their  pension risk running out of money in retirement if they keep nibbling away at their pension by selling their investments to pay for their day to day expenses.

"Taking only the income naturally produced by investments provides a great deal of immunity from these pension pot fluctuations."

Dippy Singh is a freelance reporter for FTAdviser