21 January Reading Time: 4 minutes

Will the Omicron variant impact pension investments?

Andrew Megson
Chief Executive Officer

Following the successful vaccine rollout throughout 2021, many began to hope that the UK was slowly embarking on its post-Covid recovery. Indeed, the economy seemed to be stabilising, allowing savers to feel more confident in developing longer-term financial plans and retirement strategies.

However, the emergence of the Omicron variant has threatened to plunge the UK back into uncertain territory. Particularly leading up to the Christmas period, Government orders to resume working from home where possible fuelled rumours of another national lockdown and more economic turmoil. And this did nothing to help pension planners’ confidence, particularly when it came to retirement investments.

Indeed, a recent survey commissioned by My Pension Expert found that almost half (48%) of more affluent retirement savers are concerned about how the Covid pandemic will impact their investments.

So, how real is the Omicron variant threat?

Prolonged uncertainty

For many savers, the emergence of the Omicron variant signified a period of prolonged uncertainty. And as we all know, uncertainty can be detrimental to people’s retirement plans – particularly those with investments.

Of course, investors will be familiar with stock market volatility and the risk that comes with it. However, the scale and extent of the volatility caused by Covid-19 has been unprecedented. After all, the UK economy essentially shut down throughout the country’s three lockdowns, and now, the prospect of new variants threatens to further hinder the UK’s economic recovery.

As such, Britons will likely be concerned about the value of their pension investments. Indeed, over a third (34%) of respondents to My Pension Expert’s aforementioned survey claim that they have found themselves in a weaker position when it comes to their retirement savings because of the pandemic.

Signs to be optimistic

That said, evidence suggests that Omicron’s impact on the UK economy is expected to be modest.

Data from the Bank of England (BoE) highlighted that UK retail sales rose by 2.1% in December 2021 compared to the same month the previous year – largely due to the fact that less restrictive social distancing measures enabled most people to continue working and shopping from home. This suggests that the economy has withstood the worst of Omicron; thereby suggesting that the value of investments intended to fund retirement may soon start to recover.

Of course, this does not mean that the economy, and indeed investments, are immune to future Covid shocks. Further mutations will likely emerge in the coming years; however, with high vaccination levels in the UK, it is likely that the resulting economic impact will not be as severe as that seen in 2020, or even at the beginning of 2021. In one way or another, the UK will largely be able to remain open.

My Pension Expert, therefore, urges pension planners to remain calm in the face of Omicron, as well as future Covid-related economic shocks. Sudden changes may seem intimidating at face value, but avoiding rash investment decisions now will certainly strengthen one’s financial position later down the line.

And vitally, it is important to remember advisers are on hand to help people better manage their retirement investments.

Expert advice

Given that advice can be a key factor in protecting retirement finances within a turbulent economy, My Pension Expert is proud to have launched Imperium Advice, a bespoke investment service designed to help clients level up their investments.

With this service, clients receive regular market updates and analyses, helping them understand how changing economic activity will impact their investments. What’s more, their personal independent financial adviser will always be on hand to offer advice and recommendations. As such, clients can be confident that their investments deliver the strongest results and secure the best possible outcome at retirement.

The prospect of new mutations of Covid-19 can be unnerving, particularly as the UK economy appears to be sensitive to changes to the virus. However, Britons must remember to remain calm and seek expert advice where possible. This will ensure they can effectively manage their investments and confidently continue on their route to a financially secure retirement.

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