The current market turmoil has been reducing the value of many pension funds. The question is though, is it really that serious for the long term investor in a pension?

The equity values on pension funds have fallen since the latter half of 2007 and unfortunately have continued to do so in 2008 and 2009. This is as a result of the major concerns in the global economic and financial markets.

However, those who have a longer term until their retirement age or who are continuing investment post retirement through an Approved Retirement Fund, should be able to withstand this volatility, basing their commitment to equities on the knowledge that they will outperform other asset classes over the longer term.

An advantage of this current situation is that asset prices are now relatively low to what they were this time last year. This is a good time to invest. By investing now in a managed fund, more units can be purchased with a single or regular premium pension, the value of which should increase over the term to retirement.

By building a portfolio of stocks and shares, through equities and bonds, you can diversify your investment so that all the “eggs are not in the one basket”.

By combining different asset classes, you can offset some of the risks that each investment carries on its own, while enjoying the advantages and benefits of each. In addition to traditional managed funds, there are new options that offer even greater opportunity for the spreading of risks.

In conclusion, the markets have recently been detrimental to the short term value of pension funds. However, now is not the time to panic just yet. Confidence in the markets will be restored and we will see a return of positive values to pension funds.