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How the Trustees invest the money in your Pension Account

In this article
How we invest your money What is the Trustees’ investment target?

How we invest your money

The Trustees are responsible for investing your Pension Account.  They appoint professional investment advisers to give them expert advice. 

With this advice the Trustees decide on an investment target and an investment strategy for your Pension Account and keep these under review - see below for more information.

The Trustees have selected an index tracking manager - Legal and General Investment Management (LGIM) - as the investment manager. 

Hence all the money you add to your Pension Account is invested in Funds that are managed by LGIM.

For more information on the LGIM Funds see the page about the Funds.

Your money is pooled together with the money invested by every other member of the Scheme and other pension schemes, so that transaction costs to you are reduced through economies of scale. 

We keep a record of your contributions and your investments in your own Pension Account and you can contact us to request a Statement of Account at any time.

It's worth noting that an index tracking manager does not try to outperform a specific index (e.g. the FTSE All Share Index) but simply holds investments in the same proportion as the index itself, so the performance of the Fund closely follows that of the index. This is known as passive management.  

Not all the investments in the Which? Mixed Investment funds are index-tracking. For a full breakdown, contact us.

What is the Trustees’ investment target?

Your Trustees have a specific, measurable target in mind when investing the Pension Accounts.

Their objective is to grow your Pension Account by more than the rate of inflation (measured by the Consumer Prices Index) as follows.

  1. By 4% per annum more than inflation when you’re more than 20 years from your Selected Retirement Age (SRA). 
  2. This target gradually reduces to 3% more than inflation when you’re between 20 and 15 years from your SRA.
  3. By 3% pa more than inflation when you’re between 15 and 10 years from your SRA. 
  4. This target gradually reduces to 2% more than inflation when you’re between 10 and 5 years from your SRA.
  5. By 2% pa more than inflation when you’re between 5 and 3 years from your SRA.

This reducing target arises because higher return generally means higher risk; your Trustees’ aim is to gradually lower the risk of large changes to the value of the money invested in your Pension Account as you get closer to your SRA.

The investment target in the final three years before your SRA depends on the option you choose as you get closer to that time - whether you're thinking of taking a single cash lump sum, a series of lump sums, a drawdown, or an annuity. 

There is more information about these targets and options on the page about Funds.

The Trustees’ targets won’t be attainable all of the time because there is no investment strategy that guarantees such rates of return.  Your Trustees seek to meet these objectives over the long term by running an investment strategy which combines different types of investments with the aim of hitting the target, but without undue risk of underperforming for a significant period of time.

If you want to invest your money differently from the Trustees’ target, you can transfer the money in your Pension Account to your own private pension arrangement periodically.

For more information you can find the Trustees' formal Statement of Investment Principles here.