Is a pension an investment?

Yes, yes, we know! The words ‘pension’ and ‘retirement’ are unlikely to fill you with excitement. But your pension could be crucial to living your best life when you stop working – and that can definitely be exciting.

So here’s a quick – very quick, we promise – guide to a personal pension and what it could mean for you.

Yes. The money is normally invested so it has the chance to grow over time, potentially giving you a nice little nest egg when you need it.

Like all types of investment, the more you put in and the longer you leave it, the more it could grow. But it’s also possible you’ll get less back than you put in because the value of investments can fall as well as rise.

Stocks, bonds, real estate, other assets – pension providers invest in various mixes of all of them. It depends on the pension scheme and level of risk you choose for the chance of greater reward. 

That’s entirely up to you, your lifestyle and your plans for the future. It’s worth thinking through what you might need to live on later in life.

You should factor in the potential for bigger household bills and increased health care, but you potentially won’t have to worry about daily travel costs and mortgage payments. The fun bit is that you can also think about the holidays and hobbies you might have more time for.

Once you’ve looked through all that, it could be worth checking how much is in the pensions you currently have and asking yourself – is it enough?

You may well already have a workplace pension up and running, so it’s worth checking your contributions there and seeing if you should start adding more. You can also set up a pension pretty easily online. And obviously, the sooner you start, the more you could have when you need it.

Whether you’re an experienced investor or just finding out what investing is, we’ve got a range of articles to help you understand more about investing.

We regularly update our articles depending on what’s happening in the market so check back for future updates.