• Understand why your workplace pension is invested.
  • Understand the way workplace pensions can be invested.
  • Understand Scottish Widows’ approach to responsible investing.

Read time

5 mins

There are many different types of investment approach for your pension savings, and these will be influenced by several factors, including how close you are to your targeted retirement age.


Why is your pension invested?

Your pension savings need to grow so that they can provide you with a pot size that supports you during retirement.

Your pension provider invests your savings on your behalf with the aim of helping your pension pot to grow. How it’s invested should be based on your attitude to investment risk. Generally, higher risk investments have a greater potential for growth, but also a higher likelihood that you could lose some or even all of your investment.

Unless you specify otherwise, your workplace pension will be invested in a default investment option. For most providers the default investment option will use “lifestyling” which is explained below.

There’s no guarantee for what will happen with your pension investments. Past performance shouldn’t be used to predict future performance, but viewing your investment as a long-term commitment can allow your pension savings to grow over time. Watch our film on stock market volatility where our investment specialist, Scott, discusses the long run view of your pension savings.

If you're considering making any changes to your pension, we strongly recommend you speak to a financial adviser – you can find one by visiting the Unbiased website. You will usually be charged for any advice given.

For more information on investments, view funds and investing in a nutshell page or balancing risk vs return page.


How your pension is invested


Stocks, shares, and equities are all different words for roughly the same thing. To buy a share, stock or equity means to own a tiny part of a company.

Growth in the value of a share depends on lots of factors, including the company’s performance.

Companies can make regular payments to shareholders – these are known as dividends. However, this isn’t always the case, and the amount can vary depending on factors like company profitability.



A bond is a loan where you are the lender. When you buy a bond, you loan money – either to the government (government bond) or to a company (corporate bond).

That means the government or company will have to pay your money back to you within an agreed timeframe, and they’ll have to pay you interest on it.

Bonds can also pay a regular amount to their holders through interest payments.



A pension fund is a combination of investments selected by fund managers. It aims to offer investment returns in line with a certain benchmark. A pension fund will invest in a single or multiple types of assets. For example depending on which fund you choose, the fund could be invested in bonds, shares, property or a mixture of these assets.



Understanding how you feel about risk is important when it’s time to make investment decisions. When you invest, the general rule is that the greater the potential for growth of a particular approach, means the higher the level of risk involved with that approach.

As you get close to retiring, it makes sense to move your pension savings into lower risk investments. This reduces the potential for growth, but it can help protect your pension savings from market fluctuations, as you approach retirement.

At Scottish Widows, we can provide investment options that manage this de-risking for you. If you have a plan with us and you’re invested in a lifestyle investment option, for example with any of our Pension Investment Approaches, we begin a ‘de-risking glidepath’ before your planned retirement date. This means that we start to gradually move your pot from higher risk to lower risk investments from 5 to 15 years before your selected retirement age.

Other providers may de-risk your investments for more or less time depending on the provider and approach you are invested in. Speak to your provider if you want to find out about your specific investment arrangement. You can also watch our film on pension lifestyling to find out more.

It's important to review your investment choice and your attitude to investment risk regularly, perhaps each year when you receive your annual statement. If your attitude to risk is different from your current investment option, you may want to change how your plan is invested. If you’re not sure, speak with a financial adviser and you can find one by visiting the Unbiased website. Please be aware that you will usually have to pay for any advice given.


Responsible investing

Your pension investment, along with any properties you may own, is likely to be one of the largest assets you own. It has the potential to grow to a large number over the years.

Because your pension is likely to be invested in lots of companies, potentially from across the world, your pension pot can be invested in companies or assets that have significant impact on a range of societal matters and issues that may be important to you.

We include all Scottish Widows pension investments in our Net Zero target. Our target is to make all our investments carbon-neutral by 2050 through responsible investment decisions - and we aim to be half way there by 2030.


We are making positive changes primarily in two ways:

  • Greater stewardship – larger pension providers, such as Scottish Widows, are major shareholders in many companies. Therefore, they’re in a stronger position to challenge the practices of business and encourage them to stay more aligned to pension scheme members’ interests.
  • Change in company behaviour – as momentum and interest gathers behind more responsible business models (whether to do with carbon emissions or board diversity), companies who wish to maintain their share valuations and their social license to operate need to follow suit and embrace the positive changes. Otherwise, it’s much harder to appear attractive and aligned to investor principles.

For more information on our approach to responsible investments, visit our responsible investment page.


Watch our films to find out more

Scottish Widows Be Money Well is committed to providing information in a way that is accessible and useful for our users. This information, however, is not in any way intended to amount to authority or advice on which reliance should be placed. You should seek professional advice as appropriate and required. Any sites, products or services named in this module are just examples of what's available. Scottish Widows does not endorse the services they provide. The information in this module was last updated on 11th October 2023.


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