How Your Pension Value Is Calculated

Overview

Your NICE Pension Group pension uses a unit-based system, which is how most workplace pensions work. When money goes into your pension, it buys units in investment funds. Your pension value is simply the number of units you own multiplied by the current price of those units.

Understanding Units

Think of units like shares in a company. When you invest, you're buying a slice of a fund that holds lots of different investments. The more units you own, the bigger your slice. The value of each unit goes up and down based on how the underlying investments perform.

Your units stay constant unless you make changes like switching funds or transferring money in or out. What changes day to day is the unit price, and that's what makes your pension value move.

The Calculation

For each fund you're invested in, we multiply your units by the current unit price. If you're in multiple funds, we add them together to get your total value.

For example, say you have 10,000 units in a Global Equity Fund at £1.50 per unit - that's £15,000. Add 5,000 units in a Bond Fund at £2.00 per unit - that's another £10,000. Your total pension value would be £25,000.

How Unit Prices Are Set

Fund managers calculate unit prices each working day. They add up the value of everything the fund owns, subtract any costs, and divide by the total number of units held by all investors. This gives the price per unit.

Unit prices are based on market closing prices from the previous business day, so there's always a slight lag between what's happening in markets and what you see in your pension value.

How Contributions Become Units

When your employer sends contributions to us, here's what happens. We receive the money and allocate it to your account. Then we invest it according to your fund choices at the next available dealing point. The amount invested is divided by the unit price to work out how many new units you get.

So if £300 goes into a fund with a unit price of £1.50, you'd receive 200 new units added to your existing holding.

Why Your Value Might Differ From Contributions

Members sometimes expect their pension to equal the total they've contributed. But your actual value will differ because of investment performance. If markets have risen since you invested, your pension will be worth more than your contributions. If markets have fallen, it could be worth less.

Charges also reduce your value slightly over time, and the timing of your contributions matters too - money invested when prices were high buys fewer units than money invested when prices were low.

For Financial Advisers

For IFAs, we can provide full transaction histories showing contribution dates, unit prices at purchase, and cumulative unit holdings. We can break down current holdings by fund with unit counts and prices. This data supports reconciliation, performance analysis, and suitability assessments.