Everything You Need to Know About A Pension Fund

What's a pension fund?

This might be one of the most straightforward questions yet slightly complex to answer than you might think.

What’s a pension fund1? Well, this might be one of the most straightforward questions yet slightly complex to answer than you might think.

When you think about pension schemes, your mind probably races to a 60-year-old who’s slaved or 30 years working in a factory or as a public defendant. When he/she suddenly hits the sunset years mark, their colleagues award them with a flashy trophy, while the government wards them with a monthly check when they retire. While that might be true for some people, pension benefits have more to them than just that.

Almost 80% of retirees who receive pension funds will only get a small benefit, and it might come from a firm the worker left years ago. With that said, here’s a detailed guide to pension funds.

What’s A Pension Fund?

A pension fund is typically an investment product that allows you to capitalize on the cash you save for retirement. Tax relief2 and any employer contributions are also included in the pension fund. These pension plans hold the savings of several investors, and certified finance managers make specific investments.

Moreover, unlike other investment options, pension funds don’t feature capital gains taxes. Being exempt from paying capital gains taxes, means that your assets will grow faster over time, thus making pension funds worthwhile.

How to Choose a Pension Fund

When you start a workplace pension or private pension3, you might be offered a selection of pension funds so that you can make an extensive decision about how your cash is invested. Most people choose their pension provider’s default pension fund UK, which suits a wide range of people, despite the differences in income and age.

Excellent pension funds invest in an array of assets to assist in managing your risk. Some of the popular asset choices include shares4, stocks, bonds, real estate, and capital investments. You can select a pension fund based on things like the investment type, the investment location, and the risk profile. However, all the specific asset choices will be made by pension fund experts.

Nonetheless, things vary when it comes to pension funds like the defined benefit pension schemes. Since these pension schemes promise you a particular retirement income, all the investment decisions will be made by the scheme’s board of trustees. Therefore, you need to be careful when choosing a pension fund and pension company, too. If you’re not certain, be sure to seek the advice of an independent pension fund advisor, who’ll walk you through all you need to know about pension plans, including pension fund charges.

Moreover, to figure out how much you might receive from a pension fund, be sure to use the pension fund calculator.

Common Questions

What’s a Pension Fund?
What Are the Benefits of A Pension Fund?
What Are the Types of Pension Funds?
Can One Have More Than Two Pension Funds?

Our top pension articles

Pension Tax Relief

In 2017-2018, the projected gross pension1 tax relief was €38billion, up from €37 billion in

Our popular guides

Money Management

Learn about why hiring a professional accountant may often be the best solution.

Mortgages

Find a mortgage plan that’s personal and designed to suit your individual needs.

Life Insurance

Explore your options for short-term funds to help you secure that new home.

Pensions & Retirement

Discover the types of pensions available and the steps to take before retiring.

Inheritance Planning

Find out what you should do to make the most of your money.

Bridging Loans

Explore your life insurance and income protection options.

Contact us about your goals or if you need to chat to a financial adviser.

We focus on creating financial security and building long-term wealth for our clients.