Taking a Look at Your Pension Fund Investment Strategy

It’s weird isn’t it that most of us regularly check our bank accounts to see how we’re spending our money or to see if our savings are growing nicely for that holiday planned for next year. With the new banking apps and online resources it’s easy to check our balances or our share dealing account to see how those investments are doing. And yet…….how often do you check to see how one of your biggest and most important investments is doing? Your pension(s)!

Auto enrolment was a Government initiative set up to help more people save for later life through a pension scheme at work. It was phased in from 2012, starting with the largest UK employers and by 1st February 2018 all eligible workers would have been automatically enrolled in their employer’s workplace pension scheme. So most of us have money invested in a pension somewhere.

But here’s the thing – very often when we first meet a new client we find out that they haven’t really taken a look at their auto enrolled pension or indeed any pension schemes that they are invested in for months, if not years. In fact many haven’t looked at all and are still invested in the default investment option that was set when they first joined a scheme!!!

Now of course this could be absolutely fine, however, if you haven’t looked at your pension pot(s) then how do you know if it’s growing as quickly as you’d like it to? How do you know if it’s invested in the right type of companies with the appropriate level of risk for your intended retirement date? How do you know if it’s invested in the types of companies that have the values you consider to be important? I’ll talk more about company values, green and sustainable investments in a future blog. And equally, if not more important, who is set up as the beneficiary for your pension investments should something happen to you?

So over the course of many years we have concluded that there are a number of reasons why people are so ‘in the dark’ about their pensions. I think it’s true that historically pension providers were a bit behind some other financial institutions when it came to having easy to access online accounts where you could regularly monitor your pension pots. To a large extent I think that seems to have changed since Auto Enrolment and the new online platforms are much easier to use.

The second reason seems to be that because it’s such a long term investment it’s a little bit boring – especially when you’re still in your twenties and retirement is like a millennia away. Hmmmm not true unfortunately – money invested in your pension pot during your twenties is going to be invested for the longest period of time so it’s REALLY important that it’s invested in the right funds with the appropriate level of risk – and from a fifty-something year old – trust me, the time goes pretty quickly!!!

The third reason is the most worrying I think – this is the group that have buried their heads in the sand either because they aren’t particularly interested or because they feel that investments/pensions/risk/annuities etc. is all just a little bit too complicated to be bothered about.

In response to those people that count themselves in the third group we would urge you to at least take a look at your pensions to see who they are with, how they are invested and who is set up as the beneficiary should something happen to you. Once you have the information you can at least then choose to make an informed decision or better still get some independent financial advice to make sure everything is looking rosy.

One final word of caution – please do be careful about online fraudsters when it comes to pension transfers and drawdowns – make sure you do your homework and seek appropriate financial advice from an FCA regulated adviser or company.