How to find out what is in your pension and why you should care

A funny thing happened when I turned 50. I went from being the person people avoided asking about my day job, to everyone wanting to grab five minutes with me.

The topic, of course, is pensions. In our 50s, pensions suddenly become much more real. Retirement is no longer a distant idea; it's something that may be just 10 or 15 years away. Questions that once seemed easy to ignore, such as "Will I have enough?" and "When can I afford to retire?", start to feel urgent.

For many people, a pension is their biggest investment after their home. Yet hardly any of my friends knew exactly where their money is invested or what it was invested in. While they check their bank balances regularly, monitor their subscriptions and jump onto new fixed rate energy tariffs as soon as their old ones near expiration, their pension contributions might as well disappear into a yawning black hole.

They have very strong opinions of what they want their retirement to look like and they’re also incredibly outspoken on issues like AI and climate change, but they have no idea if their pension pots have exposure to things like chip makers or oil companies, something that was brought to the fore by the recent IPO of SpaceX.

Elon Musk is a bit like marmite and investors either love or hate him, but the company’s inclusion in some tracker funds has meant that people might be investing in his endeavours without realising (although of course Tesla has been a public company since 2010).

But it’s not just ideology that’s a consideration here; in fact much more important is that understanding what's inside your pension can help you make better decisions, assess risk levels, and ensure your investments align with your long-term goals.

What should you do?

1. The first step is identifying who manages your pension and remember you may have multiple pensions with different providers. Most providers now offer online access through a website or mobile app. Once logged in, you'll usually find details of your current pension value, contributions made and the funds your pension is invested in (many people are surprised to discover they're invested in a default fund they never actively chose).
2. Next find the name of your fund or funds – common fund names often include words like “Global Equity” “Balanced Growth” “Target Retirement” – the fund name will give you clues about how your money is being invested. For example, a Global Equity Fund is likely to hold shares in companies around the world, while a Target Retirement Fund may gradually move into lower-risk assets as you approach retirement.
3. The name alone doesn’t tell the whole story. These funds contain hundreds, sometimes thousands, of underlying investments and most providers offer a factsheet for each fund. The “Top 10 Holdings” section is often the most revealing bit, and you may discover that your pension owns shares in major global businesses such as Microsoft, Nvidia, Shell and HSBC. Even if you've never bought shares directly, you may already own tiny stakes in some of the world's largest companies through your pension fund.
4. And pension funds don’t just invest in shares; many contain a mixture of assets designed to balance growth and risk. Shares tend to be more volatile but have historically delivered stronger returns over long periods, Bonds are effectively loans to governments or companies, and a small proportion may be held in cash.
5. One of the most important things to understand is whether your pension is invested in index funds or actively managed funds. Index funds track markets like the FTSE 100 or the Nasdaq and this is where you could find you have exposure to newly listed companies like SpaceX. Active funds are managed by professional fund managers who select investments they believe will outperform the market.

Understanding what you own also helps you understand risk. Many people discover their pension is either taking more risk than they realised or less risk than they need for their retirement objectives. This is why it’s important to think about bringing old pensions together because they may be invested in funds that no longer suit your objectives or charge higher fees than other alternatives.

It might all sound incredibly complicated but you wouldn’t buy a house without checking how many windows and doors it had or where in the country it was located. And taking a few minutes to log in to your pension, identify your fund names and read the accompanying factsheets can provide a much clearer picture of where your retirement money is invested. Once you understand the funds, the companies and the risks involved, you're in a far stronger position to decide whether your pension is working as hard as you are.