Investing for your financial future

What savers need to know about UK pensions to make informed choices

When saving for retirement, understanding where your pension is invested is crucial for securing your financial future. For many savers, the appeal of UK investments is significant.

A recent study revealed that 37% of savers would prefer UK investments if they offer returns comparable to global options[1]. Interestingly, an additional 16% are willing to prioritise domestic investments, even if it means accepting lower returns.

This indicates a growing sense of loyalty to supporting the UK economy, but it also raises questions about whether these preferences arise from informed decisions or simply an emotional connection to home-grown investments. Pensions are often the most significant financial asset people possess, yet understanding of their details is surprisingly limited. How many of us can confidently say we know if our retirement savings are invested in UK businesses or infrastructure projects?

Knowledge gap in pension investments

Despite pensions being one of the most significant assets for UK workers, awareness of how pensions are invested remains alarmingly low. Only 13% of savers are certain that their pension includes UK investments, while 24% believe it does but aren’t sure. Additionally, 63% admit they have no idea whether their pensions are funding UK businesses or infrastructure projects.

It appears that while 74% of savers recognise that their money is being invested, only a small fraction understands the details. For instance, just 23% of Defined Contribution (DC) savers and 25% of Defined Benefit (DB) savers are aware of where their investments are allocated. With such a low level of awareness, it’s challenging for individuals to feel confident about how their pensions are managed.

Can you choose where your pension goes?

When it comes to making choices, only 37% of DC savers believe they possess the knowledge and skills necessary to select pension investments. Similarly, 37% stated that they feel incapable of doing so.

This lack of confidence underscores the need for improved financial education. To tackle this issue, pension providers, employers, and the government must collaborate to enhance financial literacy. By providing savers with the necessary tools and information, they can make informed decisions that align with both their ethical values and financial objectives.

Balancing greener investments with financial returns

While climate change and ethical considerations are important to many savers, research shows mixed opinions about trading returns for greener investments. Only 19% of DC savers would accept lower returns for the sake of sustainability. Additionally, 50% said they might consider it, but only if the environmental benefits were significant. Meanwhile, 31% prioritise maximising financial returns over ethical concerns.

This indicates that, although environmental factors affect decisions, financial performance continues to be a primary concern for savers. Consequently, pension providers encounter the challenge of balancing sustainable investments with delivering strong returns.

Role of the government and employers

Pension schemes are currently exploring investment opportunities in the UK that promise attractive returns. However, the government plays a vital role in establishing the right framework to make these investments viable. By promoting the growth of UK businesses and infrastructure projects, the government can provide pension schemes with valuable options that benefit savers while contributing to national economic growth.

Moreover, employers should make wiser decisions when establishing pension schemes for their employees. Instead of concentrating solely on low costs, they ought to prioritise value and potential growth. While the types of UK investments under consideration may be pricier, they frequently offer the possibility of larger, long-term returns.

Are you unsure where your pension is invested?

Understanding your retirement savings and investment options can help you make informed choices for the future. Whether you want to prioritise UK investments, greener options, or simply maximise financial returns, it’s essential to take an active role in your pension planning.

Contact us today to discuss your requirements or to learn more about how your pension can work harder for you. Start planning for a better retirement with the confidence that your investments align with your goals.

Source data:

[1] Independent research carried out online by Yonder consulting with a nationally representative sample of 2,071 UK adults aged 18+ between 3-4 March 2025, (of which 603 have a DC workplace pension).

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE. THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.