Types of Pension Fund Management

There are many different ways to invest your pension plan and it can be a bit overwhelming to decipher, but luckily there are many options when looking for pension advice.

Your pension advisor or provider will explain all the differences in detail, but the two major categories of pensions are either ‘with profit pensions’ or ‘unit-linked pensions.’

The first option with profits, the money you invest is pooled together with money from other people and invested in the company’s with profit fund.  The fund is managed by investment manager, who invests the funds money into different types of investments, such as shares, property, cash and bonds and is generally managed as a cautious fund. The costs of running this fund is deducted from the fund and what is left over the profit, is available to be paid to the investors.  You get this share via bonuses which are added to your plan, the size of your bonuses generally stay the same from one year to the next as the fund will hold back paying out all of the bonuses from good years to boost the profits in bad years, this process is called smoothing.

The second option, ‘unit-linked pensions’ do carry a little more risk than the ‘with profits’ option because the overall value can fluctuate, but although there is more risk, the benefits can be higher. The main types of ‘unit-linked pension’ include:

  • Managed funds – these are popular because they provide a mix of UK and overseas shares, property, fixed interest securities and cash.
  • Specialist funds – these focus on one type of asset such as the UK or oversee shares – they are designed more for people who want to make their own investment decisions.
  • Tracker funds – these passive funds follow the performance of a particular stock market index such as the FTSE 100. Their value will rise and fall in line with that index.
  • Lifestyle funds – savings are placed in a tracker fund to start then switched over into a safer, fixed income funds when getting near to maturity age, retirement age for example.

If you are interested in a self-administered pension scheme, then that is also an option. Your best bet is to contact a pension specialist so that you can go through all the options and make a decision that is best suited for your situation.

Group personal pension plans, ethical pensions, unit and investment trusts, self-invested personal pensions, executive pension schemes, funded unapproved retirement benefit schemes, are just a few more of the options.

So, contact us today, and we can get you the best pension advice today so that you can start toward living that secure financial future that you have always dreamed about.

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You can also request contact details from the Pension Tracing Service by phone or by post.

The Pension Tracing Service
Telephone: 0800 1223 170
From outside the UK: +44 (0) 1782 389134
Monday to Friday, 9:30 am to 5:00 pm

The Pension Tracing Service
The Lantern
High Street
EX34 9QB

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This service is not affiliated with the Department of Work and Pensions or any government body. The Pension Tracing Service does not offer financial advice to our clients. However we can allocate you an Authorised and Regulated Pension Specialist.

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