Pension Regulator Toolkit

Click here for the toolkit reasons but often it purely because they want to leave investment decisions to the experts… so to speak!

If you’re happy with this fund, you don’t need to do anything more. Often the funds are ‘lifestyle’ or ‘target date’ fund. Both are intended to take a higher risk the further you are from retirement and as you approach retirement your pension pot is de-risked into safer investments such as bonds or cash.

Most workplace pensions will also offer you the option of choosing a different fund if you prefer. These are sometime known as ‘self-select funds’. Self-select funds tend to offer higher investment growth, but these might be riskier, meaning your pension pot could rise and fall in value more often.

Self-select may also offer ethical or socially responsible fund that appeals to you. They may also offer Sharia-compliant funds which invest in accordance with Islamic law, for example avoiding companies involved in gambling or alcohol.

Even if you decide to stay in the fund chosen for you by the pension scheme for now, you can usually change your mind later. You can then change to a different fund or spread your money across a number of funds throughout the time you’re building up your pension pot.

Annual Management Charge (AMC)

Whether your money is invested in a default or self-select fund, these investments will be periodically reviewed by investment specialists to ensure that you are getting the most from your investment for which you will be charged.

1. If you are in a default fund you will be charged no more than 0.75%pa as there is a restriction on the most you can be charged if you invest in this way. The administration charge for running your pension is included in the 0.75%.

2. If you are investing in self-select funds, then you will generally pay a little higher than 0.75%pa as these funds will take more to administer and potentially more expert investment advice.

Of course, there is no guarantee that self-select funds will outperform default funds but by having choice this gives members the opportunity to invest how they want to whether that be for ethical reasons or just to take more investment risk.

If you are unsure how your money is invested, or you want to take control of your own investments, you should contact your employer or the provider of the pension scheme.

If you have an interest in learning more about pensions or just want to sharpen up your knowledge why not sign up for the Pension Regulators Toolkit. The Toolkit is a free online learning program from The Pensions Regulator and while it is aimed at trustees of occupational pension schemes anyone can sign up.

The Trustee toolkit includes a series of online learning modules and downloadable resources developed to assist in learning more about occupational pension schemes. It doesn’t matter whether you are in a Defined Contribution or a Defined Benefit pension arrangement, the Toolkit is a great way to build up your pension knowledge and, just as importantly, you can learn in your own time.

For more information, please visit https://www.thepensionsregulator.gov.uk/en/trustees/ understanding-your-role/trustee-toolkit/