Today in Even More about Pensions in Ireland we look at investments and how they impact on you! You are investing in your future after all….

Part 3: Investment Options for Pensions in Ireland.

Who invests my money? Where is my money actually invested? How risky is my fund?

Let’s start with some basic points:


  • Your pension contribution is either deducted from your salary by your employer or taken from your bank account each month.
  • If either case the money deducted goes to a Product Provider (Pension Company) and is usually invested into a Pension Fund.
  • Each month as your contributions are paid in you are actually buying a small slice of the fund. These slices are called units.
  • The Pension Company employs Fund Managers and other professionals to invest the fund (and hence your units) in order to make them grow over the years.
  • How well your units grow will have an impact on your final pension when you retire.
  • The more units you purchase will also have a significant part to play in growing your units (fund).
  • So your Pension Fund is like an account; you hold units in this account which will vary in value over the years.

How does my money grow?

  • If your money was not invested (you hid it under the bed) it would decrease in value over time due to inflation.
  • This means the Pension Fund Manager needs to put your money/units somewhere to attempt to make it grow.
  • There are a range of investment options, sometimes called assets, to invest in.
  • The job of the Fund Manager is to achieve a blend of assets that grow.
  • There is an element of risk with any investment and with any asset type.

Where is my money actually invested? 

Your Money (Units) are invested in assets as selected by the Fund Manager.

There are five asset types which form the bulk of most pension funds:

  1. Shares in Companies traded on stock markets (Also called Equities).
  2. Property. (Usually Commercial property, office buildings, shops etc.)
  3. Government or Corporate Bonds. (These are like loans given to governments/companies with fixed return)
  4. Commodities & Alternatives (Gold, Oil, Renewable energy etc)
  5. Cash (Money in a bank)

How Risky is My Pension?

Each of the above asset types has some element of risk:

  • Shares can go up or down in value. If your fund only invested in shares it would be considered High Risk.
  • Property Values can also go down as well as up. A Fund invested purely in property is also High in Risk.
  • Bond Prices can vary too and returns can be low depending on market fluctuations.
  • Commodities can vary in value although some items (gold for example) always have some value.
  • Cash is considered low in risk but if interest rates are lower than inflation there is a risk cash could also lose value.


Key Point 1.

How risky your pension is depends on how much of each asset class is held in the fund and also on the management of these assets. If your Fund Manager invests well over the years you will see growth in your units.

Key Point 2.

Time is vital. Buying more and more Units over the years will help you to grow your fund. START TODAY!!!!

Key Point 3. 

We are all different and have different attitudes to risk. Make sure you know risky your fund is.


Most pension funds are not guaranteed and can go up or down in value!

Action Point:

Ask your pension provider/financial advisor about your fund: How risky is it? How is it doing? Where is it invested?

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