What happens to my pension pot when there’s uncertainty in the financial markets?

Like all pensions, your Nest pension pot is invested in lots of financial markets like stocks, shares, property and much more. We pick markets that generally rise in price over the years, choosing the ones we think will make money for you over the years, if not decades that you’re saving with us. 

These long-term rises in price are occasionally interrupted by events that create uncertainty – like rises in national interest rates, energy shortages, global conflict, pandemics and political crises. This uncertainty can sometimes cause the price of some financial markets to rise and fall unexpectedly, which could affect how much you have in your pension pot.

Once the short-term uncertainty is over, markets tend to begin rising again. These short-term falls are a natural part of investing and are built into our strategy. 

Our goal is to make sure that your pot grows enough to match or beat the rising cost of living.

We protect your savings in 3 ways. 

1. We invest your money for your long-term future, helping your pension pot grow steadily over years, or even decades. This means we don’t need to react to short-term changes in the market, which can often lead to poor decisions. 

2. We spread your risk by putting your money into more markets than the average pension provider - so when one market is struggling, any drop in value should be balanced by the other markets that you’re invested in. 

This is the investment equivalent of making sure we don’t put all your eggs in one basket. Spreading your money into lots of baskets means that even if one of them falls, you haven’t lost everything. 

3. We only work with the top investment experts in each market you’re invested in. For example, specialists in property manage any real estate deals, and the world’s leading fund managers in stocks handle any investments in the stock market. It means your money is in the best possible hands. 

Over 99% of our members are invested in one of our flagship Nest Retirement Date Funds. You can find out the specific fund you’re in by logging in to your online account. We’ve designed these funds so they shouldn’t be too affected by short-term falls in the stock market.

If you’re in the Nest Higher Risk Fund or the Nest Sharia Fund, you might see bigger falls in your pension pot. That’s because a larger proportion of your money is invested in company shares, which are more affected by uncertainty than other markets. However, your pension is likely the longest-term investment you’ll make. Short-term changes to the market may not affect what you’ll get when you retire.

To find out which investment markets your fund invests in, check out our quarterly investment reports. They’ll give you a regular breakdown into where your money is invested and how your fund is performing.

Log in to your Nest account to find out.

We believe our flagship Nest Retirement Date Funds work for most people. Our investment strategy has been carefully designed to handle any potential temporary falls in the markets.

If you’re looking for guidance for your specific circumstances, then it might be worth discussing your options for a financial adviser or exploring MoneyHelper. You’ll find more information on our Guidance and advice webpage.

If you’re seeing major changes to the markets when you’re close to needing your pension, we understand this can be stressful. We’re here to offer help and support. 

Over 99% of our members are in one of our Nest Retirement Date Funds. Ten years before your Nest retirement date, we start moving your money into investments that should keep your money safer. This is known as lifestyling, and it keeps your pot protected from unpredictable changes to the markets. It’s one of the reasons we recommend you keep your Nest retirement date in line with your future plans. 

If you’ve chosen a different Nest fund, not all of them are lifestyled and it may be worth checking your fund matches the level of risk you’d like to take.

Finally, the longer you save, the more time you’ll have for your pension pot to grow in order to make up for any losses. 

As always, the best course of action is to seek independent, expert guidance for your specific circumstances. MoneyHelper may be able to point you in the right direction.

When markets are quickly rising and falling in price, this is known as 'high volatility'. It means that market prices change quickly from day to day, hour to hour, or even minute to minute.

When you transfer your pension pot, all investments in your current scheme are sold at the market rate that day. The money is then used to buy different investments in your new pension scheme. If markets move significantly during the time it takes to complete your transfer, you risk locking in any investment losses.

We recommend you get free, impartial guidance from MoneyHelper or discuss your options with an FCA regulated financial adviser before you transfer your money.