Pension Fund Dividends

mark5

If your pension is invested in a fund are the dividends due to the fund added as and when each company pays a dividend or held and distributed at a later date?

SonOf

Are you investing in pension funds or a different type of fund?

Pension funds are nearly universally accumulation units only. This means dividends are not distributed to you but retained in the fund and the value reflected in the unit price.

If you are using Unit Trusts/OEICs or some other types, then you get the choice of income units or accumulation units with many funds. Only income units distribute the income (either to buy more units in the same fund or added to your cash account).

jaybeetoo

Dividends from shares, investment trusts, ETFs, OEICs, etc are normally paid into your SIPP when the dividend is paid. You can usually choose to leave these dividends as cash or automatically reinvest them. This assumes you have income units for non-share investments. Normally you’d go for accumulation units while in the growth phase of building your pension.

tripled

Funds will be labelled as Accumulation or Income. An accumulation fund will automatically re-invest dividends within the same fund. An income fund will pay the cash back into the SIPP. Your SIPP settings will then determine what happens to the cash.

As an example, this Vanguard fund through Fidelity offers a choice of accumulation or income.