Making Pension Fund Choices

Carefully choosing your funds can help you to balance investment growth and risk, such as changing your fund choice over the course of your working life or splitting your pension savings between a mix of funds.

With a company pension based on investments, you will normally be offered a small range of 20 to 25 funds. Your money is usually put in the default fund unless you wish to put it in another one. If you have been asked to choose an investment fund for your pension scheme, then firstly you need to assess your attitude to risk at this current time of your life. The longer you expect to leave your money invested, the more likely it is that the growth potential of a more volatile fund will be attractive to you. If you have other pensions, investments and sources of income that are lower risk, you may want to accept more volatility.

In general, there is a price to pay for the additional safety associated with less volatile investments, with the long-term potential for growing your pension savings increasing with volatility.