Investing for beginners

When asked, 40% of people didn’t realise their retirement savings were invested. It’s one of the reasons we’re on a mission to help people understand what happens to their money.

Is a pension an investment?

Yes, your pension savings are invested. We’re with you from your first job till your last, looking after your money for decades – and the best way to do that is by investing it carefully and responsibly.

Your money is invested in shares, property and more, with the aim of growing your money more than the rising cost of living.

How Nest invests your pension

Can I choose where my pension is invested?

Although some people have the confidence to take full control of how their pension is invested with a self-invested personal pension (SIPP), most people rely on their pension provider to set an investment strategy.

Like all major workplace pension schemes, we offer a different funds with different investment approaches. We’re particularly proud of our award-winning flagship fund, which works to grow your money while minimising investment risk.

If you don’t want to be in our main fund, you can switch to a Nest pension fund that matches your specific beliefs, faith or investment style.

How much can I invest in my pension?

The minimum you can invest in a workplace pension is 8% of your take-home pay, with you, your employer and the government paying different amounts. There is no maximum, so you can contribute extra now towards a more comfortable future. The amount you contribute is entirely up to you and how much you can afford.

Some employers contribute more than the minimum. If they match contributions, then the more you put into your pot, the more they will too. It’s usually worth taking advantage of this offer.

How time affects your pension

It’s easy to think of money in terms of short or medium-term needs, like saving up for a new car or a holiday. A pension is different because it’s one of the longest-term investments you’re likely to make. You contribute money today, knowing that you’ll be needing it decades later.

Investing helps you buy into economic growth in a way that a savings account can’t. Imagine that you regularly bought a £1 loaf of bread in your weekly shop. If anything within the production chain or the economy shifted to make it more expensive to produce – for example, the price of wheat rising or a supermarket’s transportation bills going up over the years – then farmers and supermarkets would pass that cost on to you so that they can still make profits. Over the years, it could rise from £1 to £2 or more. You’d spend more of your pay to get the same loaf of bread.

Having a pension means you’re invested in the supermarket and in commodities like wheat. When these prices rise, you benefit because the value of your investments also rise. You share in their profits rather than being left to pay higher prices – all because your money is working harder. Pension investments level the playing field for you over time.

Your property might not fund your pension

If you’re in the lucky position of owning your home, you may be planning on downsizing to free up your money or to unlock it through equity release. Worryingly, you may get less money than you realise from downsizing your home and equity release can be an expensive way of accessing cash.

Contributing to your pension alongside your mortgage means you can spread your risk, rather than relying on the performance of the UK property market. It also means you could benefit from investment growth in other markets.

See why spreading your investments is a good idea.

How do I find out what companies I invest in?

Use our investment information tool to find out which companies your money is invested in through your Nest pension. You can view the companies by industry or search for them individually. The companies you’re invested in will depend on your Nest fund choice.

How are pensions invested?

We know pensions can seem confusing, but knowing how Nest invests your money can help you have more control of your future.

You make a contribution to your pension pot.

This money is held with millions of other Nest members’ pots in one of our pension funds, and goes out into the world to buy lots of things.

It’s invested in shares, property and more by our expert fund managers. The investments can range from a share of large international companies like Apple, or smaller businesses like Greggs. Or it might be lent out to an infrastructure project like building a wind farm or a new hospital. This helps it grow to keep up with the rising cost of living. And while your money is working for your future, it’s helping to keep the world working too.

The exact markets you’re invested in depends on the fund you’re in and how far you are from retirement. But the bigger the trade, the better the deal we get – so being the UK’s largest pension provider pays off here. As the markets and world we live in changes, we’ll continue to adjust where your money is invested so it keeps working hard.

As you get closer to using your pension savings to live off, we’ll move more of your money into predictable markets, depending on the fund you’re in. This means you’ll have a better view on how much income you’ll have when you’re ready to stop working. Remember, you can always choose a different fund – it’s your money and your choice.

Once you’ve stopped working and need to use your savings, we’ll keep the bulk of it invested while you withdraw what you need. We’ll help you manage your pension pot, your way.

If you decide to withdraw your savings – usually after retirement or if you transfer your pot to another provider – we’ll cash your investments out and pass the value of your pot to you or your next provider. You’ll always know how much you have at any one time by logging in to your account.

Are pension investments safe?

We understand the importance of safeguarding your pension pot – it's a top priority for us too. To keep your pot secure, we spread your investments across many different assets, and even keep a reserve in cash for top security. However, this is just the beginning – there's a lot more we do to ensure the protection of your money.

Your Nest pension investment options

While over 99% of members are in one of our award-winning Nest Retirement Date Funds, you can switch to the Nest Ethical Fund, the Nest Sharia Fund, the Nest Higher Risk Fund or the Nest Low Growth Fund. They’re designed for you to invest in line with your beliefs or based on how much risk you’d like to take.