Pensions: How to keep your money safe and growing

With most pension plans, your money will be safe and protected until you retire. There are a lot of rumours about pensions being lost through bad investments, but these are only in the case of someone putting a lot of money in a risky investment, not through major pension schemes.

To be sure to keep your money safe, choose to save it in cash form rather than investing in the stock market, which is prone to fluctuation; whilst it may pay off, there are obvious risks to this strategy.

In the case of a bank going under, your money up to the point of £85,000 per person will be protected. This is according to the Financial Services Compensation Scheme (FSCS) and applies to normal savings accounts. However, for stocks, shares and funds there are different protection rules as they count as ‘risk-based’ investment rather than savings. Therefore, if you save your pension through a fund, you should always check the details applying to protection.

Protection in the case of pensions is usually straightforward and low-risk. A pensions’ broker does not actually have your money, so if that company goes bust your investments should be fine.

Stakeholder pensions are usually covered by long-term insurance and covers 90% of your pension.

Crucially, you must double check the protection of your pension yourself, because every pension plan may have differences. Get in touch with the FSCS for more information, but bear in mind that pensions are usually a good investment and not usually risky if done through a mainstream scheme. If you take a risk on an investment, like the stock markets, be prepared for the possibility of a loss and make sure you have a back-up investment or savings should your plan not go as you might have hoped.