Trade tariffs and your pension
With governments around the world imposing trade tariffs (taxes on imported goods), we are seeing some uncertainty in the global financial markets. All pension schemes are significant investors in financial markets and, as a result, many will be seeing the impact of these recent changes on the value of their assets (the money that pension schemes have to pay your pension).
Pension schemes are long-term investors, putting money aside to pay pensions for people decades away from retirement. The Trustee Board plans for short-term changes in the value of investments; experience has shown that over the long term, investment values generally increase. However, the Trustee Board, along with its advisers, continues to monitor investment performance and the ability to continue to support the Plan, and will make any changes needed to secure members’ benefits for the long term.
Your pension remains secure
The Plan is a defined benefit (DB) arrangement, which means you are entitled to a guaranteed income when you retire based on how long you have been a member of the Plan and how much you earned while you were a member. So, while market conditions may influence the funding level of the Plan, your individual pension benefits remain secure.
The Trustee Board has a legal responsibility to ensure the Plan is properly funded and managed for the long term, regardless of short-term market changes. The Trustee Board also has an investment strategy designed to help investments grow enough to pay current and future benefits. However, it is Eli Lilly that takes the risk that the investment strategy does not deliver this growth. You do not have to worry about the effect of market changes on your pension. There will be no change to the amount of pension you receive from the Plan as a result of these changes in market performance.
The value of your benefits
If you aren’t yet receiving your pension, and you have requested a transfer value (CETV), you may see a fall in the amount your pension has been valued at. This is because your transfer value is the estimated cost of providing your benefits. This cost is impacted by changes in investment performance. However, there is no change in the value of the benefits you are entitled to.
Need more help?
If you’re worried about your pension or the ongoing market turbulence, it can be helpful to speak with an independent financial adviser. You can find one at www.moneyhelper.org.uk