Experts weigh up whether job losses and stock market volatility from the coronavirus crisis has caused lasting damage to the retirement savings of British millennials.

Research has shown young workers are among the most vulnerable to job losses or a reduction in working hours as a result of the financial strain of the Covid-19 outbreak.

Jamie Smith, financial advisor at advice firm Foster Denovo, highlighted that in these circumstances a person is less likely to continue to save for retirement. Once things are back to normal, those who have to temporarily stop adding to their pension may either have to increase their regular savings for retirement, or work for longer in order to make up for lost time. Young people tend to have their retirement savings more exposed to the stock market, through workplace pension schemes.

This is because traditional investment strategies encourage taking on greater investment risk, such as having larger exposure to stocks, the further away you are from retirement. This approach is thought to offer the greatest opportunity to improve the value of your pension, while also allowing for time to recoup losses in case of a market downturn.

However, some U.K. pension funds have been hit hard as a result of the recent stock market volatility during the coronavirus crisis. For instance, the National Employment Savings Trust (Nest), which with over 8 million members is the largest workplace pension scheme in the U.K., saw its default growth portfolio (Nest 2040 Retirement Fund) fall by just over 8% in the last three months.

These losses wiped out almost as much as the fund had returned over the last three years, according to data from investment fund research website FE Trustnet. The People’s Pension scheme has nearly 5 million members. Its default Global Investments Fund, which can have up to 85% of its portfolio invested in the stock market, has fallen just over 10% in the last three months. This wiped out all the fund had returned over the last three years.

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