A market downturn is a period of time where the stock market continues to decline, caused by a drop in stock prices. Downturns in the stock market are almost always headline news and can leave some investors feeling unsettled. This may be even more heightened when viewing a large investment, like your pension, however, it’s important to understand that market declines are just as natural as market increases. Although your emotions may be telling you to take action to protect your hard-earned savings in a dip, for most, the smartest decision you can make may be to do nothing. Here’s why…


You have time on your side

Pensions are usually the investment you will hold for the longest period of time. If you began saving into your pension pots at age 22, you would be in the market for 46 years by the time you reach retirement (assuming a retirement age of 68).



For those who are many years away from reaching retirement, this temporary market downturn is unlikely to harm your savings in the long-term, as your pension pot will still be in the market to see a recovery. And for those who are nearing retirement, there are unique fund options we provide to help you invest in less risky assets as you get older (see our LifePath fund below). 

While they feel bad at the time, market crashes (when the stock market falls more than 20%) have happened throughout history (see graph below). And while past performance is not a reliable guide to future performance, so far 100% of market crashes have been followed by a recovery that more than recovers the fall. The chart below shows some of the most significant market declines between 1984 and 2021, along with the recovery.


While we can’t predict how markets will recover from future downturns, holding your investment funds means you won’t miss the opportunity to benefit from potential future growth.


Continuing to contribute to your pension has many benefits

Your pension savings can be helped in a market downturn by pound cost averaging. If you contribute to your pension on a regular basis, you benefit from the average price of the investments you buy over time. So when you continue to contribute during a downturn, you buy investments at lower prices, which could be beneficial in the long-term.



Also, all contributions into your pension are boosted by a generous tax relief government top up. Depending on your circumstances this up-front 20% (or more) boost makes saving into your pension one of the most savvy and tax-efficient investments you can make. The tax you would normally pay on income is waived if you pay this cash into your pension. If you’re a basic rate taxpayer it only costs you £80 to add £100 to your pension, or only £60 for higher rate taxpayers and £55 if you’re a top rate taxpayer. Learn more about the advantages of pension tax relief



The Moneybox  Pension funds help manage the risks of investing 

We have worked with trusted experts to offer you four different fund options for the Moneybox Personal Pension.

The Fidelity Index World Fund diversifies your investments into more than 1,600 global companies across 23 developed countries. This diversified exposure spreads your investment risk globally, meaning you haven’t got all your eggs in one basket. The fund tracks the MSCI World Index, meaning you’ll feel similar ups and downs as the overall market’s performance. 

The Old Mutual MSCI World ESG Index Fund also spreads investment risk across a range of global companies so you are not tied to the fortune of any one company. Additionally, it has the consideration of being a socially responsible fund. This fund scores global companies based on their environmental, social and governance factors, such as how companies respond to climate change, treat their workers and manage their supply chains.

The Islamic Global Equality Fund follows the principles of Islamic Finance and has been approved by an independent Shariah committee. This fund excludes industries such as alcohol, gambling, tobacco, military equipment or weapons and any products containing pork. Instead, the fund invests globally into shares across a range of sectors such as Technology and Healthcare. Please note that this fund is domiciled in Luxembourg and is not covered by the UK Financial Services Compensation Scheme (FSCS).

Finally, the BlackRock LifePath Fund is a ‘Lifestyle’ fund unique to pension investments. This fund changes the balance of your investments as you get closer to your anticipated retirement date. If you are younger with many years until retirement, the fund will invest in higher growth assets such as shares and property. These carry a higher risk, higher potential reward strategy and may be the reason you could be seeing a large fall in your investments. However, here you have the time in the market to see a recovery and market growth once again. Plus, as you grow closer to your retirement age your investments in the fund will switch to safer assets such as bonds, lowering your risk of negative returns.


You can also choose to customise your pension allocations to build your own portfolio. Here, you’ll get access to even more funds such as technology, healthcare and emerging markets and more. Customising your pension allocations means you’re in control of your allocations, so it’s important you understand how you should be selecting funds and managing investment risk.

You can change your investment allocations at any time within the Moneybox app by going to Settings > Allocations > Personal Pension.

Learn more about the Moneybox Pension

While tuning out of the short-term market fluctuations and noise of headlines may be challenging, knowing your time horizon, focusing on your long-term investing goals and continuing as you were is, for most, the best way to view your pension pot during a market downturn.


As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Tax treatment on your pension contributions depends on individual circumstances and is subject to change. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55, increasing to 57 in 2028). If you’re not sure whether the Moneybox Pension is right for you, a suitably qualified financial adviser can help you decide. Moneybox Personal Pension T&Cs Apply.