Work pensions - how do they work etc

brasso

Well done village_life -- for your age, you're doing well to get these things sorted, and you're right to want to know more about what's happwning to your money. Too many people just shrug their shoulders and ignore these things till it's too late.

Much depends on your personality and your attitude to risk. By definition a pension is a long term investment, so IMHO, you can afford to take more risk. Whether you want to, is up to you. I was in a job which began a contributory pension scheme. A year or two later a colleague and I investigated the funds this was being invested in. We both had a fund of around £5K then. I put all of my pot into 2 funds described as "relatively high risk" while he put his in low risk funds. We stopped contributions at that point for reasons I won't go into. When I left in 2005, my pot had risen to £18K while his was £6.5K. It could very easily have gone the other way of course, so don't take this as advice.

These days I have a SIPP (self-invested personal pension) as well as a company pension to which I contribute 4% and my employer 8%. You may want to investigate SIPPs as you get a huge range of funds and stocks to invest in. You choose where to put your money, and can monitor it online to see how it's doing and whether you should be changing your investments.

Google SIPP or check out Hargreaves Lansdown and/or SippDeal on the web. Here, whatever you pay in gets supplemented by at least 22% from the government and if you pay top-rate tax you can claim back even more through your tax return.

Info on funds is all over the web. Personally I like Digitallook but there are lots of others. Here you can search to see which funds and sectors are doing best.

You should also think about opening an ISA for regular tax-free savings. Again the Hargreaves Lansdown website (among many others) will tell you what you need to know.

Good luck.