How your workplace pension is invested
One in three people surveyed expect their workplace pension to be the most important source of retirement income1. The way your pension is invested can have an impact on your retirement savings, so it’s important that you understand how it works and what you can do to stay informed about how your pension is tracking against your retirement income goals.
How your pension works
Step 1: Auto enrolment
You join your pension scheme automatically and your money is invested in a default investment strategy. Once you have joined, you can review your contribution levels, investment options and target retirement age, to ensure they meet your retirement goals.
Learn more about auto enrolment
Step 2: Making contributions
Your employer will usually make regular payments into your pot on your behalf. And, you may also make regular contributions from your salary. These will be deducted from your pay before you receive your pay each month, and paid across to Fidelity on your behalf.
Learn more about contributions
Step 3: Deciding which funds your money goes into
When we receive your pension contributions, we invest them in funds, which hold money from tens of thousands of pension scheme members like you. These funds invest your money in assets such as company shares, government bonds and cash deposits. There are two ways of deciding which funds your money goes into:
The ‘default’ investment strategy
The default investment for your plan is there to give you the peace of mind that someone else is helping to look after your investments for you. The funds are carefully selected by experts and monitored to help you to build up the savings you need for a happy retirement.
Learn more about this strategyThe ‘self-select’ strategy
You can choose the funds yourself, from the range available through your pension plan. This is often called ‘self-select’ and it allows you to tailor an investment strategy to your particular long-term goals.
Learn the basics of investingInvesting in the default means that during the early years of your working life, we invest your money in a way that has the potential for long-term growth.
As you get closer to your retirement date, there might not be as much time to recover if equities fall in value. Your fund gradually changes what it holds to more income-focused investments. This is done by moving some of your money out of company shares and into bonds (which are loans to companies, local authorities and governments). As you approach retirement age date, the level of risk is designed for people who are ready to retire. These income-focused investments still carry risk. The level of that risk can be higher in volatile markets, during periods of unpredictable and sometimes sharp price and interest rate movements, which means that the value of your investments can fall in value dramatically during those periods.
With this type of strategy, all the changes to your investments happen automatically – you don’t need to do anything. Default funds and strategies are intended to meet the needs of a wide range of pension investors – people of different ages, backgrounds and income levels. There’s no guarantee that your plan’s default investment will be suitable for your particular retirement goals.
If your plan has this type of investment as its default, the strategy may also be available as a self-select option.
You can find out more about the fund or funds you're invested in by logging into your online account, PlanViewer. Each fund has its own 'factsheet' that will provide you with a range of information - including fund objectives, risks, costs and past performance.
Curious about where your money goes when it leaves your payslip? We’ve partnered with fintech company Tumelo to bring you Fidelity Illuminate - an opinion tool which enables you to see the companies your pension savings are invested in, and give you a voice on the environmental, social and governance (ESG) issues that matter to you.
Reviewing your pension
Whether you self-select your own funds or stay with your plan’s default investment, it’s a good idea to review your pension savings on a regular basis, to make sure they’re still on track for your retirement goals. Two important things to check are:
Are you on track?
Use our retirement calculator to discover if you are on track to meet your retirement goals.
Your retirement age
Learn how your retirement age can impact your pension, and how to review it in PlanViewer.
Next steps
Learn more about investing
Find out about the different types of investments and how you can use them in your pension plan.
Check your financial wellness score
Discover helpful tips on how to improve your financial wellbeing with our financial wellness tool.
Sustainable investing
See how Fidelity are highlighting environmental, social and governance (ESG) issues.
Source - The Fidelity Global Sentiment Survey, 2023. The data collection, research and analysis was completed in partnership with Opinium, a strategic insight agency. Data collection took place in July 2023 and included a sample of 1000 UK adults.