2022 was a year of economic turmoil, the biggest annual drop since the 2008 financial crisis. Many customers were worried about their pensions due to market volatility, so in response we created monthly market summary blogs to help you understand the reasons why your pension balance was changing. We’ve also continued producing our regular quarterly performance blog, which compares the performance of our plans against each other, and the market.
Keep reading to find out how global stock markets and our seven PensionBee plans have performed over 2022. Please note, we now have eight PensionBee plans available after the introduction of our new Impact Plan in February 2023.
This blog’s only meant to provide information. The data comes from our money managers or factsheets. Performance figures are before fees and after taxes. Past performance isn’t an indicator of what will happen in the future. As with all investments, capital is at risk.
Company shares in 2022
Global stock markets
There were several factors causing financial challenges to the world’s economy in 2022: Russia’s ongoing invasion of Ukraine and China’s ‘zero COVID-19 policy’ lockdowns were among the most fiscally disruptive events. As the affected industries (agriculture, energy, and manufacturing) faced supply chain issues, the costs associated rose. Some companies found it difficult to reach the same level of profitability they had enjoyed in the past, which led to a decrease in the value of their shares, resulting in a drop in indices and investments (like pensions).
| Index | Investment location | Performance over 2022 (%) | Equity proportion (%) |
|---|---|---|---|
| FTSE 250 Index | UK | -20% | 100% |
| S&P 500 Index | North America | -20% | 100% |
Source: BBC Market Data
PensionBee’s equity plans
| Plan | Money manager | Performance over 2022 (%) | Equity proportion (%) |
|---|---|---|---|
| Fossil Fuel Free Plan | Legal & General | -9% | 100% |
| Shariah Plan | HSBC (traded via SSGA) | -16% | 100% |
| Tailored (Vintage 2049 - 2051) Plan | BlackRock | -14% | 97% |
| Tailored (Vintage 2055 - 2057) Plan | BlackRock | -13% | 95% |
| Tailored (Vintage 2061 - 2063) Plan | BlackRock | -13% | 95% |
| Tailored (Vintage 2043 - 2045) Plan | BlackRock | -14% | 87% |
| Tracker Plan | State Street Global Advisors | -15% | 80% |
| Tailored (Vintage 2037 - 2039) Plan | BlackRock | -16% | 73% |
| Tailored (Vintage 2031 - 2033) Plan | BlackRock | -16% | 61% |
| Tailored (Vintage 2025 - 2027) Plan | BlackRock | -17% | 48% |
| Tailored (LifePath Flexi) Plan | BlackRock | -17% | 36% |
| 4Plus Plan | State Street Global Advisors | -8% | 25% ^ |
^ Equity % at 31 December 2022, as changes on a weekly basis due to actively managed components.
These tables don’t include fees that may be associated with certain investments. Investment performance may differ slightly from the information provided on the factsheets, due to minor timing and methodology variations. To view factsheets, please visit our Plans page.
Bonds in 2022
Global bond markets
Historically bonds have been seen as ‘safe assets’, however in 2022 they brought unwanted volatility to at-retirement portfolios. Bonds thrive on market stability as they aim to provide moderate growth for investors. However, recent surges in inflation and rising interest rates have pushed bonds between the proverbial rock and a hard place.
| Fund | Source | Performance over 2022 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Schroder Long Dated Corporate Bond Fund | Morningstar | -35% | 99% |
Source: Morningstar
PensionBee’s fixed-income plans
| Plan | Money manager | Performance over 2022 (%) | Fixed-income proportion (%) |
|---|---|---|---|
| Pre-Annuity Plan | State Street Global Advisors | -33% | 99% |
These tables don’t include fees that may be associated with certain investments. Investment performance may differ slightly from the information provided on the factsheets, due to minor timing and methodology variations. To view factsheets, please visit our Plans page.
Cash in 2022
Global cash performance
Cash savings are often the least volatile among the three most common asset types (cash, company shares, and fixed income). However, there’s a downside to holding your savings in cash as inflation erodes the value of your money over time. In the UK, the rate of inflation peaked at 10.5% in December 2022. If you’re worried about the impact of inflation on your pension pot, we’ve launched our inflation calculator to help you understand how your pension could be impacted in the long-term.
| Benchmark | Source | Performance over 2022 (%) | Cash proportion (%) |
|---|---|---|---|
| Sterling Overnight Index Average | Bank of England | +1% | 100% |
Source: Bank of England
PensionBee’s cash plans
| Plan | Money manager | Performance over 2022 (%) | Cash proportion (%) |
|---|---|---|---|
| Preserve Plan | State Street Global Advisors | +1% | 100% |
These tables don’t include fees that may be associated with certain investments. Investment performance may differ slightly from the information provided on the factsheets, due to minor timing and methodology variations. To view factsheets, please visit our Plans page.
Summary
We’re currently in a bear market. The good news is global markets have recovered from every bear market in history. Moreover, the value of most global markets not only recovers, but typically goes on to reach new highs. Even the biggest market crash since the Great Depression, the 2008 global financial crisis, was followed by the longest period of sustained growth in market history until the COVID-19 pandemic struck markets in 2020.
You may find yourself rethinking your pension savings during the cost of living crisis, or worrying about whether you’re making the right choices. PensionBee customers can have peace of mind knowing that our pension plans are being managed by some of the world’s biggest money managers. Again, it’s worth remembering that it’s normal and expected for pensions to go up and down in value over time.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
