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Workplace pension: why you’re probably already an investor

For a lot of people, being an investor feels like a distant goal rather than a reality. There is a broad perception that holding a portfolio of financial assets is only for the wealthy, or those with the time and the inclination to pore over market data and make projections. 

However, anyone in full-time employment in the UK is likely to already be investing. With or without knowing it, most people already have an investment portfolio in the shape of a workplace pension. 

According to the Office of National Statistics, some 78% of UK employees now have a workplace pension. Before auto-enrolment was introduced in 2012, this figure was less than 50%. The overwhelming prevalence of workplace pensions is a relatively new phenomenon and there is a broad lack of understanding around how they work and what they can do. 

In a hurry?
  • If you work full time, you’re probably already invested in the markets.
  • 78% of UK employees have a workplace pension, most of which are looked after by NEST, which invests on your behalf.
  • You can control your existing pension directly by transferring to another provider. From there, you can ensure that your investments are in line with your financial situation and your long-term goals.
  • With a Moneyfarm Self-Invested Personal Pension, you’ll have control at your fingertips, with 24/7 visibility on how your pension is progressing.
  • The ability to move to a higher risk level may also help grow your savings more effectively over the long term. Get started today!
Transfer your pension


How most workplace pensions work

Auto-enrolment into a workplace pension scheme, in a nutshell, means that a portion of your salary is deducted and put into a pension plan. Your employer is then legally obliged to make contributions to that scheme. You can opt out, but the default has been enrolment since 2012. 

These days, most people are enrolled onto a direct contribution scheme. You may be aware, for example, that your workplace pension is handled by the National Employment Savings Trust (NEST), which was set up by the government specifically to handle auto-enrolment. 

If your pension is looked after by NEST, you’ll be invested in what amounts to a low risk, low return portfolio. As a government scheme, it’s unsurprising that NEST is fairly conservative in the way it handles the investment side of its remit. 

You can control your investments directly

What a lot of people don’t realise is that you can take full control over your workplace pension at any time. One side effect of auto-enrolment has been that a lot of people with a workplace pension are unaware of it or barely interact with it, instead allowing it to build passively over time. 

It’s easy to transfer away from NEST or any similar scheme for greater control and transparency. With a Moneyfarm Self-Invested Personal Pension, for example, transferring is as easy as filling in a few details

When you transfer, you’ll be asked a series of questions about your financial situation and your attitude to risk. We’ll then recommend a portfolio based on your profile that is suited to your long-term goals. You’ll have full, round-the-clock transparency on the performance of your portfolio and access to a dedicated consultant for whenever you want to discuss your situation.

The benefits of taking control

We’ve already mentioned the ease of access that comes when you switch to a more customer-friendly service, but it’s an important point to focus on. You’re probably already an investor, so why not have those investments at your fingertips rather than having them squirrelled away in a pot you rarely check. 

There’s also a chance that your contributions are split across multiple providers – NEST is far from the only workplace pension. With the average person having around 12 jobs over their lifetime, there are millions of workplace pensions that savers no longer interact with or contribute to. To avoid this money being stranded, you can track your various pension pots using this government service

You can read more about the benefits of consolidating your pension investments here, but it’s ultimately about transparency, control and the ability to plan for the long term. Don’t let your investments go stagnant – taking control of your pension savings can pay dividends (literally) in the long run. 

You’ll want your investments to perform

Then comes the all-important topic of investment performance. This is only relevant once you start viewing your workplace pension as an investment for the future rather than a piggy bank. You don’t have to simply put money away and hope it grows – you can actively improve how it performs. 

For younger people with more time to grow their wealth before retirement, the ability to take on more risk can and should be taken advantage of. Conservative portfolios are great, but you could be missing out on potential returns by sticking with a low risk option. You can get an idea of how much different the composition of your investments can make on our portfolios page – just adjust the risk level to see the projections. 

Again, this comes down to control. You may find that your situation calls for a relatively aggressive portfolio, or that you are fine with a lower risk option. By leaving your money in a generic pension scheme, however, you’ll never have a retirement portfolio that’s specifically built around your goals.

So, for a no-obligation chat with one of our investment consultants about how you could benefit from switching your workplace pension, feel free to get in touch. Otherwise, you can read all the details about pension transfers by following the link below. 

Transfer your pension