Q:

What are pensions and investments?

A:

Quick Answer

Pensions and investments are contributions made to a company by its employees to be used in buying shares or carrying out other profitable projects. Employees who are members of particular pension schemes start receiving pension benefits upon retirement.

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Full Answer

Pension providers generally offer a wide range of investment strategies. If an individual does not make an active choice, the provider will invest the pension in a fund it deems appropriate.

According to The Money Advice Service, investors should choose only those funds with competitive charges. Investors should review their investment choices at the end of every year so they take good control of their pensions and investments. The review process does not necessarily mean that there have to be changes on investment choices already made, but it helps to ensure that those choices reflect the risk involved with the investments. This review process is especially important when an individual nears retirement and wants to make more conservative pensions and investments at that retirement age.

The Money Advice Service suggests that young employees who are new members of a pension scheme should avoid using their salaries to buy property and other forms of safe investments; instead, these employees should buy shares in good mixtures to reduce the financial risk of their investments.

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