Pension saving is a long term endeavour, but there has been quite a bit of volatility in recent months and years. The most recent change is the Bank of England’s decision to increase interest rates to one percent.
The fourth consecutive increase from the central bank has scared some, especially with inflation set to soar to 10 percent.
With retirement years just around the corner, or having arrived for many, what does rising interest mean for pensions?
Express.co.uk spoke exclusively to Karen Barrett, CEO and founder of Unbiased, who laid out clear guidance for what rising interest rates may mean for pensions and savers.
Ms Barrett said: “Those looking to take out an annuity could benefit from a higher interest rate.
READ MORE: Pension ‘crisis’ as plans to retire at 66 shattered for many women
The option has been less popular recently as people look towards drawdown, which keeps pension money invested.
However, with the potential for rising rates, certain individuals may feel this is more appropriate for them.
Ms Barrett also examined where pension funds are invested, and how rising interest rates may impact this.
She added: “A proportion of many pension funds are invested in bonds.
“The value of bonds could increase if interest rates rise.”
Unfortunately, the current climate of soaring inflation and rising interest rates is likely to create uncertainty amongst Britons.
However, for those who have their money invested, in pensions for example, it is important not to panic.
This is because rushed decisions may end up costing people money in the long-run.
It will therefore be important to take a measured approach to financial management, especially when thinking about retirement.
Regardless of what decision a person makes with their pension, it can be a complex time.
As a result, many individuals could benefit from seeking financial advice.
Ms Barrett stressed this is particularly important given the current climate of both rising inflation and interest rates.
She concluded: “A pension pot is one of the most important forms of saving anyone has.
“It’s very important to get the right financial advice before touching it.”
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
