What is a pension fund?

When you or your employer pay into your pension the contributions you make are invested. What your pension pot is worth at retirement depends on how much has been paid in, the length of time it has been invested and how your investment has performed over that time.

Pension Basics

Who runs the pension funds?

Pension funds are created by fund managers. These fund managers then word for different investment management firms. The fund managers will create funds that consist of a range of assets including equities (company shares), fixed interest investments, property and cash. 

Different funds will hold a different combination of these assets, depending on the objective of the fund. The fund manager has to operate within these objectives to achieve the best return possible for their investors.

What different types of pension fund are there?

There are a few different ways that pension funds operate, and these different fund categories can also be further broken down into funds specialising in a certain industry sector or geographical location.

Managed funds

Managed funds are actively managed by a fund manager or group of fund managers to make sure that the fund is achieving the best returns.

Tracking funds

Tracking funds are a little more automatic and passive in that they generally follow an index of some kind.

Lifestyle funds

Lifestyle funds are designed to move you towards a specific retirement goal and date. They’ll invest you in a range of funds, and potentially de risk some or all of your investment (move it from funds exposed to market conditions, into more stable funds like fixed interest investments) gradually as you approach your retirement date. You’ll need to have an idea of when you want to retire, and how you think you’ll withdraw your pension if you’re thinking of investing in a lifestyle fund.

How do I invest in the pension fund?

Every time you pay money into your pension, that money buys units in the fund or funds you’ve selected to invest in. The fund is valued at regular intervals (most often, daily) and so your pension value is determined by how many units you’ve bought over time, and what they’re worth at that valuation point. 

How does my investment grow?

Over time, the value of the assets within the fund can grow. This growth can be achieved by interest being earned on fixed interest investments and dividends paid out on the shares it holds. As the fund grows, the value of each unit you’ve bought in the fund also grows. However, because the fund invests in things that are susceptible to market forces, the value of the fund, and therefore your investment can go down as well as up.

 What type of pension fund should I invest in?

Choosing an investment approach is a decision you’ll need to consider based on your own circumstances. Your age and your attitude to risk are just two of the main considerations. You’ll also need to think about how involved you want to be with managing your investment choice. 

Thinking about the types of assets you’re investing in has also become an important factor. Over the last few years investing in ethical and sustainable businesses has become a priority to investors.  

With Penfold the funds we offer are provided by HSBC and BlackRock. They actively manage these funds for you, to take away any stressful decisions. 

What are my fund options with Penfold?

You have a few different options to pick to decide where your money will go. You can check out all of our plan details here.

Standard Plans

If you pick the Standard plan, your pension contributions are managed by BlackRock, the world’s largest asset manager, to invest your money for you, you can just pick the risk level that suits your situation! BlackRock work hard to protect and grow your savings over the long term through a wide range of low-cost investments around the world. 

Sustainable Fund

Similar to the Standard plan, BlackRock manage this fund for you. The Sustainable fund invests across thousands of companies and other investment assets. But through its advanced technology it aims to invest only in companies that meet high sustainability standards and scores.

Shariah Fund

Our Shariah compliant fund is managed by HSBC, and it invests only in companies that are compliant with Shariah law.

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