Pension Matters: Maximising the performance of your pension fund

August 24, 2021

Pension Matters: Maximising the performance of your pension fund

There is a well-known and ancient proverb that says: “The best time to plant a tree was 20 years ago; the second-best time is now.” Not surprisingly, this saying had little to do with trees. Over many years, this has been supplanted with an investment reference, in both cases, reiterating the importance of starting on a path to your goals when the
opportunity arises.

This sentiment holds true for your Pension Investments. The earlier you start saving towards your pension, the greater your expected income at retirement.

A Promise of Future Income

The very nature of pension funds, being a promise of future income based on current contributions to a scheme, underscores the value of prudent management of the investment direction of the Fund. Fortunately, the allocation of investments in a company-based pension plan, is governed by regulations set out in the Pensions Act and has the direct oversight of a Board of Trustees, as appointed by the members and Investment Manager(s) for the Fund.

Marrying the unpredictability of investments as a tool to generate income and the proposed assurance of a secure pension when you have left the formal world of work, may seem an unlikely goal. However, to safeguard the investments of a Pension Fund, while at the same time maximizing the returns on the portfolio, an appropriate mix of assets are selected and invested in, to match the risk appetite of the Fund.

Diversifying To Protect Pension Investments

The performance of the fund is usually directly correlated to the riskiness of the assets invested. Equities, for example are the riskiest option, but have the greatest potential return, while real estate, bonds and money market instruments offer moderate to low risks with lower levels of returns.

Self-employed/contracted individuals who are not in a company-based pension plan, are able to choose their unique risk profile once contributing to an individual approved retirement scheme. They are however guided by professional administrators in making this decision.

MAXIMIZE YOUR PENSION CONTRIBUTIONS

Investing in a pension plan is vital in ensuring that you can meet your needs in retirement and have a steady stream
of income, which allows you to relax and pursue your interests without worrying about how you are going to cover your living expenses. Maximize your Pension contributions to bolster your portfolio and your overall retirement income.