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What to consider when choosing a pension fund

In this section, we’ll help you understand more about choosing the right investment for you.

We can’t give you financial advice, but this page aims to help you make a decision about what to do next.

What you should be thinking about

What type of assets should you invest in?

Investing in a number of different assets helps lessen the risk to your investment. Different assets respond differently to economic conditions. This means if one asset type is under-performing, another is likely to be performing better.

Our funds invest in a variety of assets. Here’s a list of the type of assets and examples:

Asset type What is it? Examples

Equities (shares)

Equities are shares in companies listed on stock exchanges around the world. Some funds invest only in certain countries, while others invest in companies from all over the world. Others only invest in certain types of company, such as technology companies.

  • Large, medium or small sized companies
  • UK, European and worldwide
  • New or established companies


Sovereign bonds/debt

Gilts are bonds issued by the UK government as a way for them to borrow money, usually for a fixed term, in return for the payment of interest. As gilts can be bought and sold on the open market, their value can rise and fall.

Sovereign bonds/debt work in the same way as gilts, but are issued by foreign governments.

  • Loans to the UK government
  • Loans to foreign governments

Corporate bonds

Corporate bonds are issued by UK and international companies as a way for them to borrow money. The company pays interest on the loan and promises to repay the debt at a certain point in time. The ability of companies to pay interest on bonds and repay the borrowed money can change over time, so this can affect the fund’s value.

  • Loans to companies


You can invest in property directly or indirectly through funds. You’ll benefit from rental income as well as growth in the value of the building itself.

  • Office blocks
  • Retails outlets
  • Property-related shares

Cash/money market

Cash/money market funds are lower risk investments aimed at providing a similar growth level to bank/building society interest rates. They invest in cash and cash alternatives.

  • Deposit and cash deposit accounts
  • Money market instruments (interest-generating investments issued by governments, major banks and other institutions)

How long do I have to invest for?

That depends on how old you are now and when you're planning to retire.

You normally won't be able to access the money in your pension fund until you reach age 55. A pension is a long-term savings vehicle, specifically designed for saving for your retirement. After your 55th birthday, you can use the money in your pension to fund your retirement.

The sooner you start paying into your pension, the better as your pension will have longer to grow. If you keep paying in throughout your working life, your pension fund will build up over the years, giving you a higher income during your retirement.

If you're a long way from retirement, you may want to invest in funds or assets that you think will do well over the long term.

If you're close to retirement, you may want to invest in funds or assets that will keep your money relatively safe in the run up to your retirement. If you're planning to take an income from your pension before 6 April 2015, you shouldn't apply for Pension Portfolio directly through our website. Please speak to a financial adviser instead.

Find out more about saving and investing.

What is your attitude to risk?

Your attitude to risk centres on how willing you are to risk losing some or all of your investment. Some people will be happy to risk their money for the possibility of earning more. Others will find that unacceptable.

All investment carries an element of risk. You are the only person who knows how much of a risk you are willing to take.

You can find out more about risk in the ‘Understanding risk’ section.

Should I try to spread the risk to my money?

With investments, it’s sensible to put your money in a variety of assets. That way, you can spread the risk, which may reduce the risk of losing money.

For instance, if you invest entirely in equities and equities go through a rough patch, you may lose money. If, however, you invest in equities, bonds and property, if your equity investment isn’t doing so well, your other investments may perform better, evening out your returns.

This is known as portfolio diversification. It helps spread the risk to your money by making sure you’re not putting all your eggs in one basket.

What about fund performance?

The returns you earn on your investment will depend on how the funds you invest in perform. If the fund performs well, you’ll get a share of the profits. If it performs badly, you’ll shoulder your share of the losses.

The fund performance depends on how well the assets it invests in perform. Each fund invests in a mix of assets, but some invest more in one type of asset than other types. For example, an equity fund will invest mainly in equities, while a property fund will invest mainly in property or property-related assets.

The fund managers keep an eye on how the fund is performing, paying attention to the performance of individual assets. They will change the asset mix whenever they need to anticipate or react to market conditions.

The fund factsheets give you information about how the fund has performed in the past. Please remember that past performance is neither a guide to nor a guarantee of future performance. You shouldn’t rely on this when you’re choosing a fund to invest in.

What do you mean by management style?

Different funds have different management styles. We have actively managed funds and passively managed funds. We also have funds that combine the two styles.

Management style What does it mean?


  • The fund manager makes specific investment decisions with a goal of outperforming certain pre-set targets.
  • This style is likely to have higher charges than passively managed funds.


  • The fund manager follows a pre-determined strategy to aim for returns that closely follow an investment benchmark.
  • This style is likely to have lower charges than actively managed funds.
  • Passive management aims to avoid the consequences of incorrectly predicting future trends.

Active and passive

  • The fund manager actively manages some aspects of the fund while passively managing others. The aim is to combine the best of both approaches.
  • The charges are likely to be lower than an active fund and higher than a passive fund.

What charges will I pay?

Each fund has an ongoing annual management charge, which reflects the yearly cost of managing the fund. The charge varies from fund to fund.

You'll also have to pay a charge for Pension Portfolio, with is a flat 0.4% a year.

To find out what the charge is for the funds your interested in, please read the fund factsheets or key investor information document for that particular fund.

Want more help and information?

Visit our Pension Portfolio page to find out more about this pension.

If you are not comfortable making your own investment decisions, please talk to your financial adviser.

Call us

If you’d like us to refer you to an adviser, please call us. This adviser is not tied to Aviva and you could get up to one hour free initial consultation. If you want any further advice or services after that, you may have to pay charges.

0800 046 6167

Monday - Friday
8.30am - 5.30pm

For our joint protection, telephone calls may be recorded and/or monitored.

Find a financial adviser

If you don’t have an adviser, visit to find an adviser in your area. An adviser will probably charge you for using their expert services.

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