With all defined contribution schemes, stakeholder schemes, personal pensions, retirement annuity contracts and occupational money purchase schemes, everything that is paid into the scheme is invested. With most schemes, you invest in one or more funds run by professional fund managers. How well the invested contributions grow is the single most important factor that determines how much pension you will get. However, is something that cannot be predicted.
You might be tempted to put your money in pension funds that have done well in the past. However, numerous studies show that past performance is not a good guide. Especially when considering long-term investments like pensions, there is no correlation between the star funds of the past and the funds, which do well today. Similarly, there is no evidence that the funds that do well today will be the stars of the future.
