Personal & Workplace Pensions

Why you need to check your pension investments (and how to do it!)

Do you know how your pension investments are performing? With reports warning that significant numbers of over 50s are potentially sleepwalking into retirement poverty, it pays to understand why and how you should be checking your pension investments.

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Why you need to check your pension investments (and how to do it!)
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So much of the rhetoric in the UK around pensions is trying to encourage people to save for retirement. Yet, that is only really half the battle. Once you have set up how you save into your pension, it is still essential to check in on it regularly. Many of us are now auto-enrolled on a workplace pension scheme - which is excellent. It has increased the number of people who have a pension in the UK. It is not quite enough, though. Here, we look at why simply paying into a pension pot isn’t quite enough and, therefore, why you need to check your pension investments regularly.

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Checking your pension investments

It may sound like an unnecessary step and needless hassle for many of us to check our pension investments regularly. However, the below reasons highlight why it is crucial to keep an eye on them.

Risk profile

When you are first enrolled in a workplace pension scheme or start up a private pension through a fund, you are usually asked a few questions. Those questions will aim to get to the bottom of your circumstances to build up your risk profile. A risk profile shows how willing you are to take on risk and your ability to make riskier investments. By checking on your investments, you can ensure that your investments are made according to your current risk profile. Doing so can also ensure that when your risk profile changes, your investments change accordingly, too. Generally speaking, the closer you get to retirement age, the less risky your investments should be. You need to make sure that your pension pot is structured to reflect that.

Ethical views

Many pension funds will invest in a wide range of investments to make the most of all possible returns while minimising risk. Doing so helps diversify a portfolio which is a prudent investment strategy to make the most of. However, that does not mean you will personally agree with every one of those investments. For example, some investments you may morally and ethically oppose. By checking in on your investments, you can ensure that such investments are not made inadvertently on your behalf. For instance, you may not agree with investing in tobacco stocks. Such stocks are pretty popular with fund managers from an investment point of view as they are defensive and can help limit losses. Ethically speaking, you may oppose them given the health risks tobacco poses.


Keeping an eye on your investments is also advisable to ensure that you are always getting the best value from your pension provider. Some fund management firms may structure their fees for their services so that the returns you receive are diminished. In some cases, those fees make a material difference. Plus, it could be that you could achieve those same returns with another firm for far less of a cost. By regularly checking in on your investments, you can take control of the fees you incur and maximise your returns as a result. Checking your investment firm is making good on the payments they are taking is one of the key reasons you should note how your pension pot is faring. It may leave you with a lot more money come retirement day.

Passive vs active

When checking that you are getting value for money, you may find it is far cheaper to invest passively. Passive versus active investing is an argument that many fund managers have in an effort to earn their fees. Fund managers obviously believe that they will outperform the market through active investing. That's why they charge and earn higher fees. However, passive investing is much cheaper and often provides favourable returns. For example, on average, stock markets return around 10% each year. That's not a return to be sniffed at - plus by investing in an index fund, your portfolio is diversified, mitigating against a fair amount of risk. Double-check that your investments would not be better placed in a passive fund to lower your fees and improve your returns.


Ultimately, you also need to know that your money is making money whatever you are invested in. If you don't check, you may have a nasty surprise come retirement day. You, therefore, need to ensure that your pension pot is not only growing but growing at a rate that you require. You need to consider how much you will need when drawing a pension to afford the lifestyle to which you aspire. If your pension pot is not performing as you would like it to or does not have enough in it based on what you need, you have two options. You either have to invest elsewhere or start investing more (or do a blend of the two). If you do not check in on your investments, you may leave it too late to make any helpful changes.

How to check your pension investments

All the information you need to check your pension investments should be available to you through your pension scheme annual statements. Alternatively, many pension schemes provide online account access so that you can delve into your investments more specifically through that. However, that doesn’t make it easy to check against your risk profile or whether they are invested according to your ethical viewpoints or return needs. If you are ever confused when conducting a check, it would be highly beneficial to seek the help of a professional, independent adviser.

Why you need to check your pension investments

While it is excellent news that you may have a pension pot already started, you cannot stop there. Even though you are actively saving towards your retirement, you need to ensure that how you are saving and investing is working best for you. That means getting the best value for your trading or management fees and investing according to your risk profile. It also means making changes should you need to, to how much you are saving. Staying on top of your pension portfolio may be dull, but it will help ensure you have the retirement to which you dream.

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