By Ellie Price
A study from Royal London (August 2020) showed nearly one in five (19%) workplace pension-holders have ‘no idea’ what happens to pension contributions, with 8% thinking their pension is saved in a bank account.
In fact, your pension funds are invested and, if you have a pension, you are an investor. Your pension statement will tell you where your money is invested and you can influence this if you so choose.
For those in a work-based scheme, there is usually a default investment option, but you can also influence where your money is invested to make sure it suits your needs.
For example, if you are a long way from retirement, you may want to have a greater emphasis on growing your pension fund through investment returns. Conversely, as you near retirement, you may want a lower risk option as you have fewer years to ride out any market volatility. This will be dependent on your needs and your views on investment risk.
But it is important to understand where your pension funds are held to make sure they suit your circumstances and can be changed, if needed, in plenty of time to make your retirement what you dream of. Your annual pension statement is a great place to start as this shows you the value of your pension now, the expected value when you reach retirement age and the investments your pension is held within.
To learn more about your pension and how you can use it to make your financial future brighter, call Ellie on 01722 653245 or email ellie@grovelyfinancial.co.uk.
The benefits to the treatment of tax will depend on your individual circumstances and may be subject to change in future. Investments may rise as well as fall and you may not get back what you originally invested.
Grovely Financial Limited is an appointed representative of Vision Independent Financial Planning Ltd which is authorised and regulated by the Financial Conduct Authority. Firm reference number 487395.