In this piece
Change the fund, not the schemeThree things to checkIf there’s no shariah fundHow much do you need?Comments- Default funds generally aren’t built with shariah in mind.
- Opting out can cost you your employer’s contribution.
- Look at changing the fund before you leave the scheme.
Auto-enrolment puts most UK employees into a default fund, and default funds generally aren’t built with shariah in mind. They commonly hold conventional bonds. It’s understandable to want out. But leaving the scheme can mean giving up your employer’s contribution, and that’s a poor swap if you could have stayed and changed fund.
Change the fund, not the scheme
Log in to your pension and look at the fund list. Many providers offer a shariah option. Nest, the government-backed scheme, has one. If you can’t see one, ask your provider or HR what’s available.
Three things to check
- Does it replace your whole pot? Switching future contributions and moving what’s already saved may be separate steps.
- Is it right for your age? Default funds often reduce risk as you near retirement. A single equity fund won’t do that for you.
- What are the charges? A higher fee is worth knowing about before you move.
If there’s no shariah fund
Ask whether your employer can add one, because a question from staff is how these lists get changed. Otherwise, take advice before you leave. A self-invested personal pension can open up more funds, but it may not attract the same employer contribution.
How much do you need?
The retirement calculator takes your age, pot, monthly payment and the income you want. It won’t predict markets, but it will show you whether the gap is small or alarming.
If you spot a mistake, tell us and we’ll fix it.
General information, not pension advice. Changing fund or leaving a scheme can affect what you end up with, so check with your provider or take regulated advice. MoneyHelper offers free, impartial pension guidance.
