Where does my money go?

Your pension money leaves your pay and quickly finds its way into carefully chosen companies, property, bonds and cash.

It’s invested, in other words, which makes you an investor.

Our video explains what happens to your pension money after it comes out of your pay packet.

So where do your pension savings go?

Have you ever wondered what happens to your pension money when it leaves your pay packet?

It doesn’t just sit quietly in a pot somewhere.

It’s used to buy bits of companies, buildings and bonds.

Over time if these grow and do well, your pension does too.

So when you start taking your pension

... you’ll hopefully end up with enough money...

... to pay for the lifestyle you want.

But there’s another part of your pension’s life that you might not know about.

When Royal London invests your pension money in a company,

... you and other Royal London customers own a share in that company...

That means that we can influence how those companies are run on your behalf.

We can encourage them to operate in a fair and responsible way...

... and to look after their employees,

... their communities, and the environment.

So, your pension money doesn’t just work and grow for you.

It also gives you power to help change the world for the better. Who knew?

Why is my pension invested?

Investing gives your money a fighting chance to grow in value over time.

If your money was only held in cash savings, inflation could eat away at its value, over time.

Investing gives your pension money the chance to at least keep pace with inflation, hopefully with some extra growth on top.

Investing comes with a risk of loss, too, which is greater than the risk of losing money held in a savings account. But the hope is that despite fluctuations in value, the overall growth trend for your pension pot will be higher than the relatively low interest that savings accrue – especially because of the value-eating effects of inflation.

So how is your pension different to savings?

Do you know what makes your pension different to a savings account?

A pension is like a savings account you can’t touch for decades, right? Not quite. Pensions and savings are worlds apart.

For starters, when you pay money into your workplace pension, your employer tops it up too. And the Government pays in as well… yes, that’s free money!

All designed to reward you for doing the right thing by setting money aside for your future.

Unlike a savings account, where your money sits around doing not very much, your pension cash is invested.

And because you can’t use this money until you are at least 55, it has plenty of time to grow.

So, you may feel you can take more risk with your pension and invest in things that could give you a higher return than a savings account… like company shares.  

This is important, because if your money stays in savings, the chances are it won’t grow as much as it could in your pension.

It could even lose value if inflation is higher than interest rates. Let us explain what we mean by that…

Inflation is a general rise in prices over time, which can be bad news for your savings because as prices rise, the things you buy cost more. If this happens more quickly than the rate of growth of your savings, you won’t be able to buy as much.

Whereas investing in a pension gives your savings the chance to at least keep up with inflation, with the possibility of some extra growth on top.

That way, when you’re ready to stop working, your pension could have the power to pay for the lifestyle you want… what’s not to like?

Remember, investments can go down as well as up and you might not get back all the money you paid in.

If you invest little and often for many years, you could build a surprisingly big pot.

It’s a win for society if people have saved enough for their own retirements, too.

Download our mobile app

If you've taken out a pension plan with Royal London since 2004 or previously with Scottish Life, you can download our mobile app to view your pension plan whenever you like.

For full details on eligibility and more about the app visit our mobile app page.

Your investment options

We have lots of ways for you to invest your retirement savings.

They're all about balancing the reward you want to get with the risk you're prepared to take.