I’m a pensions expert – what a plummeting pound means for your savings
A PLUMMETING pound means pain for many - including pension savers.
Sterling hit $1.03 against the dollar on Monday, the lowest level since decimalisation in 1971.
A weak pound means if you're jetting off on holiday, you might find your spending money doesn't stretch as far.
And in the immediate term the price of goods, like beer and iPhones are likely to rise.
That's because items brought from abroad, like electronics and hops for beer, are imported in dollars, pushing up prices for consumers.
This expected rise in prices is likely to impact your finances in another way too - by squeezing your pension savings.
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Exactly how you could be affected depends on how close to retirement you are.
Romi Savova, chief executive of retirement platform PensionBee and part of The Sun's Squeeze Team, said: "With the pound's current economic position, those who are currently withdrawing from their pension may see reduced purchasing power."
Purchasing power is what you can get for your money. When inflation is higher you can buy less, but your income remains the same, putting pressure on household budgets.
Inflation is currently at 9.9% but could still go higher, experts predict, and even more so now the pound has plunged.
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The Bank of England last week said it expected inflation to peak at 11% in October.
But that was before the currency chaos and the central bank is now expected to take stronger action to get it down.
It hikes the base rate to try and reach its target of 2% inflation.
Economists now think interest rates - currently at 2.25% after a rise last week - could reach 6% early next year, before gradually falling back to 3.5%.
High inflation can affect retirement savings in a number of ways - Romi explains how.
If you're already in retirement
If you're already in retirement, your money might not stretch as far.
The State Pension is due to rise next April in line with the current rate of inflation which is expected to be around 10%.
But there's a lag between how much prices are rising and that rise, so this could leave them worse off in the same way.
Romi said: "The rate of current inflation is already hovering at a 40-year high, and a weak pound might increase inflation further due to the cost of importing goods increasing.
"The UK unfortunately is vulnerable to the inconsistency of exchange rates as it imports more than it exports.
"When these common imports into the UK from the US (items such as stone, glass, and semi-precious metals) increase in cost, goods in the UK, become more expensive to purchase.
"Retirees that are reliant on their fixed incomes (like annuities), will be hit the hardest as inflation erodes the buying power of their retirement income."
You can withdraw cash from a workplace or personal pension from the age of 55, either as a lump sum, or regular income, or a combination of both.
Anyone taking income directly from their pension could find they are using up more of their pot sooner.
Funds invested in the UK stockmarket will have fallen in value. But when sterling is weak, the value of overseas investments when converted back into sterling will receive a boost.
So it depends how your pension is invested and is why it pays to diversify your investments.
Workers paying into their pension are also affected in the same way - but many will have time for the market to bounce back.
An annuity is one way to get a regular income, and you use money from your pension pot to buy one - it pays you a guaranteed income for life.
Providers do offer annuities that rise in line with prices. This ensures inflation does not erode the spending power of your annuity.
But there are different types of annuity and not all are inflation linked.
Those close to retiring and planning to buy an annuity now could find better rates as they are closely tied to gilt yields, which have shot up.
Better annuity rates mean a higher income.
The closer you get to retirement the more carefully you want to plan for the income you'll need to support you in retirement, and take into account any changes in the markets.
A couple who want a comfortable retirement will need to have an income of £50,00 a year between them, according to the Pensions & Lifetime Savings Association (PLSA).
Marathon not a sprint
For those further away from retirement, the falling pound is likely to have less of an impact on your retirement.
Romi said: "It’s normal for and expected for pensions to go up and down, and it’s expected that they will recover and grow further in the future."
Your pension savings are invested in the stock market, which means the value of your pension can go up as well as down.
Exactly how your money is invested will depend on your scheme.
But most people auto-enrolled in their workplace pension will find they are in a default fund.
This means their money is in a mix of cash, shares, and bonds, with little exposure to higher risk investments.
The closer you get to retirement the less risky your investments should be, to avoid being too exposed to things like big currency movements.
This can be automatic, but you can check with your pension provider.
Savers are automatically moved out of riskier investments the closer they get to retirement.
Bonds are usually a safe haven but prices collapsed after sterling hit a record low.
So some people may see their pension values drop due to bond market volatility.
Those further from retiring with years left to save should also know that they are likely to ride out the short term ups and downs, like the pound plunging and high inflation.
Romi said: "It’s normal for and expected for pensions to go up and down, and it’s expected that they will recover and grow further in the future.
"Saving for retirement should be viewed as a marathon, not a sprint.
Think before pausing
Some people may be tempted to reduce or stop contributing to their pension to afford the high costs of daily living from high inflation.
But anyone doing this should consider the consequences - and they may reduce their overall savings if they don't plan on how to make it up later on when they can afford to.
Romi said: "There may be times when a saver may be able to contribute more or less to their pension.
"Taking the time to put in place an achievable short-term saving plan can help keep savers’ on track with their savings journey even in times of greater financial stress”.
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Debt expert Sara Williams previously told The Sun that before stopping pensions, talk to a debt adviser about your options and whether there is any other help you can get.
“Pensions are one of the last things you consider cancelling - you can pay into a pension even if you are bankrupt,” said Sara who runs the .