The collapse of the sub-prime mortgage market in America might seem a million miles away from the concerns of ordinary British investors building up a pension pot for their retirement. But in today’s globalised financial system events in one part of the world can rapidly trigger knock-on effects in another.

Concerns about the US sub-prime market were a key factor behind yesterday’s 387 point fall in the Dow Jones index and the 120 point fall in the FTSE 100. Like a financial virus, this then spread to the Asian markets, which suffered sharp falls overnight. Japan was down 2.4 per cent, Hong Kong 2.9 per cent and China 4.7 per cent.

For the majority of investors who hold the bulk of their pension money in shares, these losses will have an immediate impact on the value of their pension pots. Investors in the UK stock market have seen a fall of roughly 8 per cent from the FTSE’s peak earlier this summer.

This apparently grim news needs to be put into context. Mike Lenhoff, the chief strategist at Brewin Dolphin, the stockbroker, says pension investors are investing for the long-term, perhaps for 30 or 40 years, so a short-term wobble such as the one we are currently experiencing will look like a mere blip in a few years’ time. He points out that we had stock market downturns both in May last year and in February this year and in each case the market recovered quite quickly.

He adds: “Most investors have a mixture of shares and bonds in their pension fund and one positive aspect about the latest market turmoil is that there has been a rush to buy Government bonds . This has pushed the price of bonds up so people holding these in their portfolio will, in part, have benefited from the shakeout.”

John Hatherly, of Seven Investment Management, the wealth manager, adds: “The contagion from the US sub-prime market is real enough, as we have seen from the announcement by BNP Paribas, the French bank, that it is freezing activity in several hedge funds that had invested in this market.

“However this is likely to prove a short-term problem, which central banks are already working hard to tackle, and in any event the vast majority of UK pension investors have little or no money in hedge funds. Pensions are a long-term investment and over the long term the turmoil in the US sub-prime market will have little impact, if any, on UK pension investors.”

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