Understanding Your Fund Options
Overview
Your NICE Pension Group pension offers a range of investment funds to choose from. Each fund invests in different types of assets and carries different levels of risk and potential return. Understanding your options helps you make informed choices about where your retirement savings are invested.
Types of Funds Available
Equity funds invest in company shares. They offer the highest growth potential over the long term but are also the most volatile - values can swing significantly in the short term. These are generally suited to members with many years until retirement who can ride out market ups and downs.
Bond funds invest in government and corporate debt. They're typically steadier than equity funds but offer lower long-term growth. Bonds can still fluctuate, especially when interest rates change, but generally less dramatically than shares.
Cash funds hold money in deposit accounts and short-term instruments. They're the most stable option with minimal day-to-day movement, but returns are usually the lowest. Over long periods, cash may not keep pace with inflation.
Mixed or balanced funds combine different asset types in one fund. They offer a middle-ground approach - some growth potential with some stability. The exact mix varies by fund.
Default Investment Strategy
If you haven't actively chosen your funds, your pension is invested in the scheme's default strategy. This is designed to be suitable for most members and typically uses a lifestyle approach.
A lifestyle strategy automatically adjusts your investments as you approach retirement. When retirement is far away, more is invested in growth assets like equities. As you get closer, the mix gradually shifts towards steadier assets like bonds and cash to protect what you've built up.
The default strategy is a sensible choice for many people, but it may not be right for everyone. If your circumstances or retirement plans are unusual, you might want to consider other options.
Self-Select Options
If you prefer to choose your own investments, you can select from the available fund range. This gives you control over exactly where your money goes and lets you tailor your investments to your own views and circumstances.
Self-selecting requires more engagement - you'll need to decide on your mix and review it periodically to make sure it still suits you. If you're not confident making investment decisions, the default strategy or financial advice might be better options.
Fund Charges
Each fund has an annual management charge that covers the cost of running it. This is expressed as a percentage and is taken automatically - you don't pay it separately. Different funds have different charges, with actively managed funds typically costing more than passive or tracker funds.
Charges matter over time because they reduce your returns. A small difference in charges can add up to a meaningful difference in your final pot over decades of saving. Fund factsheets show the charges for each option.
Getting More Information
Fund factsheets provide details on each fund including what it invests in, how it's performed, and what it charges. These are available from us or through any online access you have to your pension.
If you're unsure which funds are right for you, consider speaking with a financial adviser. They can assess your full situation and recommend an approach suited to your goals, timeline, and attitude to risk.
For Financial Advisers
For IFAs, we can provide the full fund range with factsheets, charges, and performance data. Details of the default strategy glidepath and lifestyle switching dates are available. We can confirm a client's current fund selection and any restrictions on fund choices within the scheme.