What is the best pension fund to invest in?

Oli West

by , Team PensionBee

at PensionBee

19 Aug 2020 /  

a range of colour options representing the choices of pension funds

If you’re thinking about taking out a pension, you’ll want to find one that’s right for you. Most pension providers offer a range of pension funds (also called plans or schemes) to cater for people’s varying needs. It can make choosing the right one feel more complicated than you might expect.

But don’t worry. We’ve outlined a few simple steps to help you find the best pension fund to invest in. We’ll start with the basics.

What is a pension fund?

A pension fund is a pot of money that’s invested in the stock market and other assets. Its goal is to grow as much as possible so that savers can use this money to live off when they retire. You may see it referred to as a pension plan or pension scheme, but it’s all the same thing.

Different funds invest their money in different ways to cater for the varying needs of savers. They might focus on:

  • Higher- or lower-risk investments (eg. stock market or bonds)
  • Specific geographic markets (eg. China or UK only)
  • Specific market sectors (eg. technology or commodities like gold)
  • A mix of the above

For example, a saver in their 20s might prefer to choose a fund that invests in higher-risk companies as they tend to have the highest growth potential. But a saver close to retirement might choose a lower-risk fund so there’s less chance their pension pot will lose value (even if that sacrifices growth opportunity).

The most common type of pension offered by companies to their employees is known as a defined contribution pension. The employee and the company pays into it, the government provides a tax-free bonus, and a pension provider invests that money on behalf of the saver.

Less common (though highly regarded) is the defined benefit pension, which pays a retirement income based on your salary and the number of years you worked for the employer. These days, it’s rare to find a company that offers this type of pension.

It’s also possible to manage your own pension, where you choose how the money gets invested. This is known as a self-Invested personal pension (SIPP). It’s suitable for those who feel confident enough to make their own investment decisions, however fees can be more expensive than a regular pension.

How do I pick the right fund?

In the UK, there are hundreds of funds to choose from. This is intentional; pension providers want to cater for a wide range of savers and offer different types of funds to suit their needs.

To choose the best pension plan for you, you’ll want to consider the following.

Pension provider reputation

A pension provider can manage your pension savings for many decades, so you might feel more confident trusting a provider with a successful track record and responsible investing strategy.

You can usually view the past performance of a provider’s funds by visiting their website. You may also be able to find fund comparisons on comparison sites or in the news. But bear in mind that there’s no guarantee that a good run will continue.

Equally, while some newer providers may not have the same track record as some of their peers, they may offer funds that you might be more comfortable with. For example, some newer funds only invest in socially or environmentally responsible companies.

Fees and charges

If you choose a provider to manage your pension for you, you’ll need to pay a management fee. This can vary significantly depending on the fund. You may also be charged a range of other fees too.

It’s best to be equally wary of funds that have particularly low or high fees. Low fee funds may include extra restrictions or charges for making changes to your pension, such as transferring it to a new provider. The best pension fund might not have the lowest fee.

Equally, high fee funds could significantly impact the growth of your pension - a 2016 Which? study showed that a 2% fee could result in a pension’s value being almost 20% less at retirement than a 1% fee.

Flexible contributions

Each payment you make into your pension is known as a contribution. Usually, contributions are made monthly but some funds allow you to choose other types of payment schedules. Others may allow you to make ad-hoc payments, which could be particularly useful if your income is seasonal or irregular.

Some providers make it easier to change your contributions than others, so check the provider’s terms before making a decision.


We live in the age of apps and instant information, and while some pension providers have gone to great lengths to update their service there are still many that haven’t caught up.

If you’re keen to keep tabs on the performance of your pension, you might want to choose good pension funds that offer an app or modern website. As well as being much more convenient than waiting for your annual pension statement, it saves paper too.

In addition, some providers offer varying levels of personal support. For example, at PensionBee we provide our customers with personal account managers (our BeeKeepers!) who can be contacted via live chat, email or phone.

Attitude to risk

Like other types of investments, pensions are not risk-free. While pensions do tend to increase in value over time, there’s no guarantee they won’t grow at a slower pace than you’d like or even fall in value.

When it comes to choosing funds, some are considered higher risk than others. For example, a fund that invests mostly in the stock market may be subject to daily fluctuations in value. Meanwhile, a fund that invests in government or corporate bonds will be much more stable. The higher the risk, the bigger the growth potential (and loss potential). But the best pension scheme for you might not be a lowest-risk one either.

It’s conventional wisdom to invest in higher-risk things earlier in life, and lower-risk things later in life. This allows your money the chance to grow as much as possible while reducing the chance of a sudden fall in value as you approach retirement. As a result, many pension providers offer a default fund which automatically adjusts its investments in this manner.

Funds available through PensionBee

PensionBee offers a range of pension plans to suit a variety of needs. This includes specialist funds for those underserved by the wider pension market, such as the Future World fund which invests your money into companies that pledge to move to an environmentally-friendly economy.

These funds are managed by some of the world’s biggest money managers, including BlackRock, HSBC, Legal & General, and State Street Global Advisors. For extra peace of mind, there’s just one fair and transparent annual fee to pay.

You can view your balance, see if you’re on track to meet your retirement goals, and adjust contributions on the fly using the PensionBee app. And if you have a question, you can speak with a personal account manager (we call them BeeKeepers) by live chat, email or phone.

There are plenty of pension funds to choose from. The best pension fund to invest in is the one that best suits your needs.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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