With a background in financial journalism across national titles, Ruby loves helping people take control of their money and specialises in pensions, tax, banking and benefits.
Two-thirds of a typical pension pot comes from investment growth, not you or your employer's contributions.
That statistic comes from pension firm Standard Life, which estimates that a £100,000 defined contribution pension would be made up of £65,000 from investment growth, £18,000 from your contributions, £13,000 from employer contributions and £4,000 from tax relief.
We tend to talk about 'saving for retirement', but if you actually relied on a savings account, the paltry interest rates would leave you with nowhere near enough money.
Understanding where your money goes is essential if you want to reach your retirement goals.
So is it time to get more hands-on? And what does that actually look like in practice?
Stocks and shares in public companies in the UK and abroad comprise the bulk of what you're invested in, particularly if you're still a long way from retirement. They have the most potential for growth, but can also see sharp falls.
Most of the rest is likely invested in government bonds. Essentially, this is coupons you buy where the government promises to pay you a regular interest payment, plus the original value of the bond, at the end of the term.
It's also possible you're invested in gold and commodities such as oil.
All of these investments could be held directly, or within investment funds.
If you have a workplace pension, it's likely placed into a 'default fund'. This is a pre-selected mix of investments chosen by your provider. Around 90% of pensions are saved in default funds.
How your pension performs plays a big part in how much your savings grow over time. If your current pension is not giving you the returns you need for your personal goals, moving your money or changing your pension fund could make a real difference.
To check your pension online, head to your provider’s website or download their app and select the option to register or sign in.
You’ll need your policy number, which you can find on your annual statement or welcome letter, along with your National Insurance number and personal details to set up your account.
Head of retirement analysis at Hargreaves Lansdown, Helen Morrissey, notes you should always take a long-term view of performance.
Chopping and changing pension investments on a regular basis can cause you problems
'Engagement is great – knowing what's going on with your pension, making the most of it. But chopping and changing pension investments on a regular basis, in response to stock market volatility, can cause you problems.'
By selling during a market dip, for instance, 'you risk missing out on the recovery, and you also risk incurring unnecessary costs around changing your investments as well.'
Instead, it simply means understanding where your money is being held and making sure it works hard to keep it on track for your retirement goals.
Look at the funds it contains and their performance over five years. Or, for a really long-term view, try using an online pensions calculator, which predicts how much you'll retire with if you keep up current contributions and a certain level of growth.
If you are not where you want to be, you can speak to your provider or an adviser to ask if better fund options are available.
One major benefit of taking a hands-on approach with your pension is that you get control over where it goes and where it doesn’t.
There might be specific companies you want to avoid or whole sectors, such as fossil fuels and gambling. Or you might want to take it a step further and only invest in companies making a positive impact.
You can also choose Sharia-compliant funds, which follow Islamic rules by avoiding interest and industries such as alcohol, gambling and defence.
Your current pension provider may provide alternative funds that suit your values, or you could switch providers.
In both cases, check with your employer about how your workplace pension contributions might be affected.
Note that in recent years, ethical investments haven’t delivered returns as high as other sectors, in part because of big rises in the cost of oil driving growth in energy companies. But that won’t always be the case.
Megan Thomas, Which? investing expert, says:
A few years ago, there were all sorts of funds with names including the words 'sustainable', 'ESG' and 'green' that were investing in companies that were nothing of the sort.
In part due to repeated Which? investigations, since 2024 the Financial Conduct Authority has required that UK funds wanting to use certain terms have to adopt one of its sustainable investment labels.
These include labels for funds wanting to make an impact, excluding certain industries, or aiming to improve companies. All require certain standards to be met.
Unfortunately, the number of funds with labels is still relatively low, and the many funds based in Ireland follow a different EU system.
It's still worth looking at a fund's holdings – the companies it's currently invested in – before handing over your money. You can find the top 10 biggest holdings on the fund's page on an investment platform. There will also be fund and sustainability factsheets outlining its investment approach and sustainability goals.
As you approach retirement, most pension providers will shift you into lower-risk investments such as bonds, in a process known as 'lifestyling'.
The aim is to avoid a market shock reducing the value of your pension just before you retire.
However, this could backfire if your pension provider believes you will retire several years before you intend to.
For instance, if your pension provider has your retirement age at 62 but you actually retire at 67, your pension could spend five years unnecessarily largely invested in low-growth bonds.
You don't necessarily need to adjust your pension's asset mix yourself, just keep your target retirement age updated as your plans change.
Whether you’re unsure if you have enough to retire, or are already accessing your savings, our money guidance service can talk you through your options. Which? Money members get unlimited access to them via phone.
Find out morePension fees are charges by providers on your pension savings for managing and administering your investments, and tend to include things like investment fees, contract management fees and other costs.
Workplace pension fees are capped at 0.75%, which includes the fees charged by the pension providers and those charged by fund managers.
However, if you switched providers, or switched funds within your provider, it's possible that you're paying more.
These fees can have a significant impact on your pension. According to research from investment firm Vanguard, if you earn an average UK salary of £35,000 and save £250 a month into your pension from age 25 until you retire at 66 (assuming a 6% average yearly growth rate):
If you are aware, you can take some control of your pension – either by moving your retirement savings to another cheaper fund, or to a different provider.
Your pension fees may appear on your annual pension statement, on your online account, or in the 'effect of charges' table in your plan documentation. If the paperwork is unclear, you can contact your pension provider directly to request a full breakdown of your costs.
If you are already in drawdown, providers are legally required to inform you each year of the exact amount paid in charges, presented in pounds and pence rather than percentages alone.
If you're a confident and experienced investor, you can move some or all of your retirement funds into a self-invested personal pension (Sipp).
Which? pensions expert Paul Davies says:
Sipps are essentially ‘do-it-yourself’ defined contribution pensions, which allow you to choose your own specific investments from a range of thousands of shares, exchange-traded funds (ETFs) and mutual funds.
Investment platforms such as AJ Bell, Hargreaves Lansdown, Fidelity and Interactive Investor offer Sipps and ready-made portfolios of funds, if you want some help choosing investments based on your preferred risk.
With a Sipp, you should also be mindful of costs because there are multiple fees. This includes platform fees and investment fees, as there are larger investment choices, as well as drawdown, transfer-out and dealing charges. Percentage-based fees are generally cheaper for smaller pots, and flat annual fees are often more cost-effective for larger pots over £50,000.
A good approach is to transfer old or frozen pots from previous jobs into the Sipp. If you are still working, you should leave your current workplace pension open so you don't miss out on matching employer contributions.
Select the option that best describes your current situation.
