For many people, a pension is something that just exists in the background. Money goes in every month, paperwork arrives occasionally, and then it’s ignored for years.
That’s understandable, but a few small checks can make a huge difference to how much money you end up with later in life.
Here’s a simple, no-nonsense way to take control of your pension without turning it into a second job.
Step 1: Find Out What Type of Pension You Have
Before you do anything else, you need to know what kind of pension you’re dealing with and who it’s with.
Common pension types include:
- Defined Contribution (DC) – the most common type for modern workplaces
- NEST pension – often used by employers for auto-enrolment
- SIPP (Self-Invested Personal Pension) – usually set up by individuals
- Defined Benefit (DB) – older “final salary” pensions (less common now)
If you’re not sure, try the following:
- Speak to your employer or HR team
- Check old emails, letters, or payslips
- Log into your workplace benefits portal
- Search your inbox for pension provider names
Once you know the provider, make sure you have your login details, this unlocks everything else.
Step 2: Check What Your Pension Is Invested In
Most pensions are automatically placed into a default fund.
These default funds are designed to be low-risk and suitable for everyone, which sounds sensible, but often means very cautious growth, especially when you’re decades away from retirement.
Over a long time horizon, this can seriously limit how much your pension grows.
Log into your pension account and look for:
- Your current fund(s)
- The risk level
- The annual management fees
Every provider is different, but nearly all allow you to choose between:
- Different funds
- Pre-set risk profiles (low, medium, high)
If you’re comfortable with some ups and downs and have many years to go, a higher-growth option may be far more suitable.
Step 3: SIPPs – Choosing Investments Yourself
If you have a SIPP, you’ll usually have far more control.
A sensible approach for many people is a mix of low-cost index funds, covering:
- Global markets
- Multiple countries
- Different sectors
An all-world fund is often a strong foundation, as it spreads your money across thousands of companies globally.
From there, you might add something extra if you’re interested and informed, for example:
- Technology
- Clean energy
- Healthcare
The key thing to watch is fees.
Each fund has its own annual charge, and lower is better. As a rough guide, anything under 0.4% is generally considered very reasonable for long-term investing.
High fees quietly eat into your returns over decades.
Step 4: Set It and Forget It
Pensions work best when you leave them alone.
Once you’ve chosen suitable funds or a risk profile:
- Set contributions to automatically invest
- Avoid checking every month
- Ignore short-term market noise
Compounding works over decades, not weeks. Regular contributions plus time is what does the heavy lifting.
Step 5: How Much Should You Contribute?
First rule: Always get your full employer contribution.
Employer pension contributions are effectively free money, and missing out on them is leaving part of your salary behind.
By law, employers must contribute a minimum percentage, and you make up the rest. Many employers will contribute more if you do.
A commonly used rule of thumb is:
Half your age when you start contributing = total % per year
Examples:
- Start at 24 → aim for 12% total
- Start at 30 → aim for 15% total
This highlights how powerful starting early can be.
If you’re starting later, don’t panic, it just means being a bit more disciplined with contributions going forward.
Step 6: Consolidate Old Pensions
If you’ve had multiple jobs, you may have several pensions scattered around.
Consolidating them into one place can:
- Make them easier to manage
- Reduce paperwork
- Give you a clearer picture of your future
- Provide peace of mind
Just be careful with older pensions that may have special benefits, check before transferring.
Final Thoughts
You don’t need to become a finance expert to improve your pension outcomes.
Simply:
- Find your pension
- Check what it’s invested in
- Adjust risk and fees sensibly
- Contribute consistently
- Leave it alone
Small actions today can mean tens of thousands more in the future, and that’s well worth an hour of your time.
