How do I know if my pension fund has performed well?

14 December 2021

Question by Jo

When I get my end of year review on my pension fund soon how do I know know if it's performed well or not. eg. 5% might sound good but if the average fund performance is 10-15%, then it's not!

Answered by Boring Money

Hi Jo,

Great question!

It's a common mistake people make thinking that 5% return for example is great, when the average has been far above this.

First of all, when assessing performance it's best to look longer term as this provides an indication of the long-term trend. One bad year, although worth looking into, doesn't normally mean a long-term disaster. Looking over a 5 year period, especially with pensions, is best.

Initially, you'll need to establish which fund(s) you're invested with. Some providers split your pension money between different funds, especially towards retirement age.

Within our profession, we have software to compare the multitude of fund & portfolio options on the market. However, you might want to look at comparison sites that provide an indication of short and long-term performance - the likes of Trustnet and Morningstar provide some great insights. you can see the short and long-term performance of your pension fund and they often provide a 'quartile ranking'. The quartile ranking provides some indication of how the fund has performed over various time periods against other similar funds at the same risk level. You can see how your funds have performed over short periods such as 1 year, and longer timeframes such as 5 years.

Based on this assessment, you could then look at what other funds options are available with your provider. You may want to engage a financial planner to help with the above and other areas of financial planning.

Hopefully that helps for now.

Have a great day!

Oliver McDonald

Answered by

Boring Money