Understanding how you pension is invested

Investments can seem complicated - especially if you don’t have much experience with them. But they’re a key part of your pension journey with us, so it’s useful to know how they work and how to get the most out of them.

Why invest?

The money that you and your employer pay into your pension isn’t the only way your savings can grow. Once you’ve paid your money in – also known as making a ‘contribution’ – it’s invested to provide you more income when you retire. Simply put, the better your investments perform, the more money you’ll have in later life.

How we invest your savings

Your savings are invested in a number of ‘funds’. A fund is a way of pooling multiple investors' money together, which is then used to invest in ‘assets’. 

An asset is a resource that is bought to generate income or hold with the expectation that its value will increase in the future. 

Examples of assets include:

  • Products: This can be anything from art, gold, and other high-value items to cars and consumable products.
  • Equipment: Machineries such as generators, diggers, and cranes, which can be bought or rented. This can also include equipment like hard hats and face masks.
  • Buildings and facilities: Commercial buildings like office buildings, factories, and retail stores.
  • Financial stocks: Investments in large companies like Pepsi, Tesla, PayPal, etc.

When you first join TPT, your savings are automatically invested in one of our “target-date funds” – or “TDFs”. The specific fund you’re invested in will depend on your target retirement age, which you can set when you join the scheme. So, someone who’s planning to retire in 10 years will be in a different fund than someone who’s just started their first job. 

A TDF is set up so that you take on more risk with higher growth potential at the beginning of your journey when you can afford for the value of your assets to fluctuate. This then changes as you get closer to retirement to give you more security. The TDF is managed by our specialist investment team so you don't have to worry about making complex choices, and they are utilised by more than 95% of our members.

If this works for you, you can keep putting money into your TDF knowing that everything is taken care of. There is also an ethical TDF that lets you avoid certain types of investments.

If you prefer a hands-on approach

If you'd like to be more involved, you can use our self-select funds to decide where your money is invested. You might want to put more of your money into commercial property, for example. Before you make a change, you should do your research and make sure you fully understand how each fund works. The amount of money you receive in retirement could increase or decrease as a result of these decisions, impacting your comfort in later life.

Watch our short video to see how your pension investments work. 

If you’re considering making a change to the way your pension is invested, it’s worth thinking carefully about the following questions first:

What type of retirement do you want? 

Even though retirement might seem like a long way off, the choices you make now can have a big effect on how you live in the future. To figure out how much money you'll need to save, you should think about things like the kind of holidays you'll want to take, any repairs you'll want to make to your house, and even the cost of your weekly shopping. The PLSA’s Retirement Living Standards might help you to understand whether you’ll be able to afford your plans – or need to start saving more. 

How comfortable are you with risk? 

Investing always involves some risk, so you need to decide how much control you want over your portfolio. Most of our members stay in our Target Date Fund, which changes where your money is invested as your retirement date gets closer. If you decide to take more control over how your money is invested, you'll need to weigh the risks of your investments against the possible rewards of a successful investment.

The Fund(s) you choose to invest in will depend on a number of things, such as how long you have before you want to withdraw your savings, how you feel about ups and downs in investment performance, and what you want to do with your money after you withdraw it.

What else is important to you? 

We make our investment decisions based on environmental, social, and governance (ESG) factors because we believe this is a better way to manage risk and improve returns. But if you care about other things, like investing in a way that is good for the world, you can move your savings into one of our ethical TDFs. Like our standard TDFs, these funds move your savings into investments with less risk as you get closer to retirement. However, they only invest in companies, products, policies, or practices that meet the standards we have set. You can read more about our approach to responsible investment here

What next?

You can find out more about the investment options available to you – including their performance and charges – in our fund fact sheets

You can also see how your pension savings are invested by logging in to your Retirement Savings Account. If you’re not sure what to look for when you’re checking or reviewing your investments, here’s some useful information

If you want to make a change to the way your savings are invested, you can do so by logging into your Retirement Savings Account. (If you’re unable to log in, please get in touch using Contact TPT). 

Remember - Any change you make to your investment preferences could impact the amount of money you receive in later life. Please consider your options carefully and consider speaking to an FCA-regulated financial adviser before you make a decision. You can find out more here.