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Pension Performance Update: February 2022

Kyle Chubb
Wednesday 2nd March, 2022

As Russia’s invasion of Ukraine continues, we felt it necessary to address the impact of this deplorable conflict for Penfold savers.

The human tragedy of Russia’s actions is paramount - but as a pension provider responsible for safeguarding the retirement of our savers, we felt it also important to comment on how this invasion might affect the short-term value of your Penfold pension.

Here’s what to expect and what you can do about it.

How does the invasion affect my pension?

Every payment you make into your pension is invested into a pension fund.

This fund is built from a wide variety of different investments - including stocks and shares, government bonds, commodities and more. The exact make-up of this fund depends on which pension plan you chose.

Our Standard risk level 4 plan, for example, uses BlackRock’s MyMap 6 fund. Our Sustainable plan uses BlackRock’s MyMap 5 Select ESG.

Your pension plan is also globally diversified, investing in companies all over the world. 

As the invasion (and subsequent economic sanctions on Russia) continue, it’s likely you may also see an impact on your pension growth, as global economic markets react to the events.

This may mean the value of the investments inside your pension are more volatile, going up and down more than usual in the short term.

What have the fund managers said?

BlackRock, the money managers for the majority of our pension funds, see the invasion as a “serious escalation” and the beginning of “protracted and unpredictable Russia-U.S. tensions”.

They have said the key financial impact will be on inflation. This is due to higher energy prices across Europe compound already high inflation rates, making many riskier assets like stocks and shares less attractive as investors seek more stable and reliable investments.

In the past week, European and US stock markets have fallen in value and the price of certain commodities like fuel and energy have risen.

Does my pension invest in Russia?

You may also be concerned that your pension contributions have been invested in Russia. Let us be clear.

None of our pension plans directly invest in Russian businesses.

Further, any businesses that have some operations in the Russian market have now had to reduce this exposure in light of economic sanctions from the West.

Of course, this doesn’t mean to say there is no Russian exposure to our investments - many of the businesses our pension plans invest in previously had a presence in the Russian market. This, however, was also at a minimum.

To put you at ease, here’s a breakdown of the exact percentage of exposure to Russia in our plans. 

Standard plan

  • Risk Level 1 - 0.10%
  • Risk Level 2 - 0.15%
  • Risk Level 3 - 0.15%
  • Risk Level 4 - 0.16%

Sustainable plan

  • 0.13%

Lifetime plan

  • 0.10-0.16%

Remember, this exposure does not come from direct investment into the country - only the broader investments in emerging markets.

You can check the exact investment inside your Penfold pension at any time with the Explore Your Pension tool.

What should I do?

While it’s completely normal to feel anxious about your pension as global finance markets shift, the best thing you can do is not panic.

Your pension is a very long term investment, more than likely to be the longest-term investment you’ll make in your life. That means you have plenty of time to let any short terms dips recover over the long term.

One of the worst things you can do is to try to access or move your money. All this means is you are selling your investments at a loss, rather than giving them time to recover.

Remember, while it can be alarming to see a drop in value today, a few bad months won’t be all that significant when you come to access your pension in 30 years’ time.

For more information, please see our guide on what to do if your pension’s value drops.

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