Choosing a Pension Fund

If you've been asked to choose an investment fund for your pension scheme, then you need to first 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. For example, if you're young, then you might choose more volatile funds, deciding to switch to less volatile funds as you get older and nearer to retirement. If you have other pensions, investments and sources of income that are lower risk, you may want to accept more volatility. Carefully choosing your funds may 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.

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.

(Lower Growth, Lower Volatility)

• Cash
• Bonds
• Property
• Equity

(Higher Growth, Higher Volatility)

In addition, your choice may be influenced by the level of charges. Higher changes in themselves may not be a bad thing, as the fund may offer greater growth potential to make the additional cost good value.