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How your workplace pension is invested

When we receive your pension contributions, we invest them in managed funds, which hold money from hundreds of pension scheme members like you. These funds, in turn, invest your money in assets such as company shares, government bonds and cash deposits.

When thinking about your investments it’s also important to think about the age you select for your retirement, as it can have a significant impact on the value of your pension savings.

This is particularly important if you are invested in the default investment option as many plans reduce the risk of underlying investments as you get closer to your selected retirement age. For example, if you select a retirement age and continue to work for a few more years your investments could potentially be growing at a slower rate as they may be invested in lower risk assets. Or if you retire earlier than the age you’ve selected, your pension savings could be invested in higher risk assets than you might want.

There are two ways of deciding which funds your pension savings go into:

If you don’t choose funds yourself, we'll invest your contributions in the default option for your plan.

If you’d rather not choose your own funds, a default investment option gives you the reassurance of knowing that it has been selected by investment experts. In addition, the default investment option will be carefully monitored and may be updated if it is decided that a different option would be better for your plan.

Default investment options are intended to meet the needs of a wide range of pension members – people of different ages, backgrounds and income levels. There’s no guarantee that your plan’s default investment option will be suitable for your retirement goals.

You can find out what the default investment option for your plan is when you log in to PlanViewer.

Investments that change during your working life

The default investment option in a pension plan is often a type of investment known as a ‘lifecycle strategy’. This means that during the early years of your working life, your pensions savings are invested in a way that has the potential for long-term growth.

When you’re closer to retirement, the aim is to protect the value of your savings by gradually moving your money into more cautious investments. With this type of strategy, all the changes to your investments happen automatically – you don’t need to do anything.

If you prefer, you can choose the funds your pension savings are invested in from the range available through your plan. This is often called self-select and it allows you to tailor an investment strategy to your long-term goals.

You can see which funds are available through your plan when you log in to PlanViewer. Each fund has its own factsheet to help you learn more. You could also choose to engage a regulated financial adviser to help you choose.

Reviewing your pension

Whether you self-select your own funds or stay with your plan’s default option, it’s a good idea to review your pension savings regularly, to make sure your funds are right for your retirement goals. Two important things to check:

  • How much you are saving - you might want to review your contributions and think about whether you’re saving enough.
  • Your retirement age - you can also check that the retirement age shown on your account fits with your plan's retirement goals. This is especially important with lifecycle strategies because the gradual changes to your investments are all based on how many years are left until your selected retirement age. Check your retirement age.

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