Investing

How to choose your pension investments

The pension investments you choose could make a big difference to the amount you have when you come to retire. Find out what you should think about.

By Kirsty Kerr

August 15, 2023

3 minutes

id

One of the best ways to help keep your pension plan on the right track to support your retirement is to make sure that where you’re invested is right for you and your goals.

So here are some things to consider when choosing and reviewing your pension investments – whether you’re just starting out, getting closer to retirement or you’ve already started taking your pension money.

How much of a role do you want to play in managing your investments?

Delegate

If you aren’t an investment expert or don’t have the time to manage your investments, you could consider a ready-made option.

These are options designed to make it easy for you to save for retirement. They start by investing in the type of funds that aim to increase the value of your pension pot over the long term. Then, as you get closer to retirement, they gradually and automatically move your money into carefully chosen funds designed to reflect how you plan to take it. With this option you don’t need to do anything as the experts will do the work for you.

If you’re in your workplace pension scheme’s default investment option, you may already be invested in something like this.

DIY

If you know how you want to invest and want to be in control, then you can choose from a large range of funds covering different types of investments (known as asset classes), regions and investment styles.

If you go down this route, you’ll need to make sure you have the time and knowledge to manage your investments. You’ll have to research options and, if necessary, change your investments. It’s also up to you to move your money into suitable investments as you get closer to retirement.

It’s important to remember, the value of investments can go down as well as up and you may get back less than what was paid in.

Make sure you regularly review your investments – even in retirement

Whichever approach you choose, you should regularly review your investments to make sure they’re on track to meet your goals – even if you’ve already started taking money from your pension savings.

If you’ve already started accessing your pension savings, bear in mind that they’ll need to cover not only your immediate spending but also the money you need to last you throughout your retirement. That’s why it’s important to make sure where they’re invested continues to support these goals.

How much risk are you comfortable taking?

Understanding investment risk is really important when choosing your investments. You should think carefully about how much risk you’re comfortable with and able to take with your money.

You can check how much risk you might be comfortable taking with your investments with our risk questionnaire.

Are your investments diversified?

For most people, it’s a good idea to spread your money across a mix of investment types (like equities and bonds) and across different countries. This is known as diversification.

It means that if things go badly in one particular country or investment type, not all of your money will be affected.

You may already be invested in a workplace default or another option with a diversified mix of investments. But if you decide to choose your own funds, you’ll need to make sure you’re suitably diversified by researching and picking different types of funds. You’ll also need to regularly monitor your investments and, if necessary, switch them.

What next?

If you’re a Standard Life customer and you’d like to check where you’re invested or make changes to your investments, you can do this online or on our app. You can find out more about our online services on our website, or visit our support page for FAQs and ways to get in touch.

If you’re still unsure about which investments are right for you, it’s a good idea to speak to a financial adviser.

The information in this article is based on our understanding in August 2023 and should not be taken as financial advice.

The value of investments can go down as well as up and you may get back less than was paid in.