Investing your pension savings

The money you put into your pension is invested with the aim of helping your savings to grow over the years. Some people like to choose their own funds, but others prefer to leave it to the experts, and we have something for both options.

Don’t want to choose your own investments?

Your contributions will be invested in the default Mercer Smartpath fund called ‘SW Mercer Target Drawdown Retirement’. This is where the fund is actively managed on your behalf.

The aim is to grow your pension pot until you’re 8 years from the target retirement age of 65, and then gradually move into investments designed to reduce the impact of significant financial market volatility as you approach retirement.

Your target retirement age matters because it affects when you switch into lower-risk investments. The default retirement age in the Plan is 65, but you can choose an age that suits your plans. Set your own retirement age (and change it at any time) by logging in to Optimize.

You can find more about the investment options by visiting Scottish Widows, Your Workplace Savings.

Want the freedom to choose your own investments?

You can find the full range of investments by visiting Scottish Widows, Your Workplace Savings.

If you’re selecting your own funds to invest in, it’s important that you keep a close eye on your choices over the years. For example, as you get closer to retirement, you may prefer to invest more in lower-risk funds or different asset classes and look towards protecting the value of your account.

You can track and change your investment choices online by logging into Mercer Money.

All investments come with a degree of risk and particularly if you are making your own choices, you need to understand and be comfortable with the risks before making the investment choices.

• An ‘asset class’ is a category of assets or investments, like equities or bonds. Normally, assets in the same class have similar characteristics, but they can have very different returns and risks. The value of the investments in all asset classes can go up as well as down.
• Investments that can offer higher rewards often come with higher risks, which means there’s a greater chance of losing money.
• With lower-risk investments, there’s less chance of losing money, but the growth will usually be less.
• Past performance is not a guide to the future. The value of an investment is not guaranteed and can go down as well as up.

Investment funds can be passively or actively managed:

• Passive funds aim to track a particular stock market index, with the fund’s allocation to individual stocks the same as their weighting in the index.
• Active fund managers make investment decisions to try to beat a particular stock market index. Because of the higher level of research and transactions involved, these funds tend to have higher charges than passive funds.

If you want to select your own investments but are uncertain about what to do, we recommend that you speak to an independent financial adviser. To find an adviser in your local area, visit unbiased.co.uk. Advisers usually charge for their services.