Should you add gold to your pension?

Woman putting savings in a golden piggy bank.

(Image credit: Guido Mieth via Getty Images)

Do you plan to use gold to fund your golden years? If not, you may want to reconsider.

With the gold price gaining 65% in 2025 and 7.6% in 2026 through to 2 February (despite a recent pullback) it is clear that gold has a role to play in investors’ portfolios. And one expert thinks that also applies to pensions.

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Gold could protect your pension through diversification

The key advantage to holding gold in your pension is that it offers a degree of protection through diversification.

It is crucial that your pension is as resilient as possible. You don’t want your golden years to be ruined by a stock market crash wiping out the value of your pot.

As such, most pension funds are diversified between stocks and traditionally safer investments like bonds.

However, that logic is starting to unwind. In recent years, bonds and equities have been more positively correlated with each other, thanks largely to persistent inflation (which erodes the real value of bonds over time).

“Investors are increasingly questioning the reliability and diversification benefits of traditional safe havens such as government bonds,” said Currie.

Gold is, in many people’s view, a better diversifier. Its low correlation with both bonds and equities means it can help to cushion pension savings during periods of market stress.

How much gold should you put in your pension?

The caveat is that, as gold price movements in late January and early February showed, it can be volatile. It also pays no interest, so is something of a dead weight in your portfolio outside of periods when its price is rising. Historically, gold prices have often traded flat for long periods of time (such as from the 1980s to the early 2000s).

For these reasons, you shouldn’t put too much gold in your pension.

“Understanding how much gold fits into your pension has never been more important, particularly for time-poor savers nearing retirement and looking to access their pension,” said Currie.

Currie recommends that gold should comprise around 5% of a well-diversified pension portfolio.

How you hold this gold is also important. While you could invest in gold mining stocks, these are often more volatile than the metal itself. You’ll get a more direct correlation with the gold price by buying a gold exchange-traded commodity ETC, such as the iShares Physical Gold ETC (LON:SGLN).

As of 2006, you can hold physical gold in a Sipp – but only in the form of gold bars, not gold coins.

We explain how to invest in gold in a separate article.

Dan is a financial journalist who, prior to joining MoneyWeek, spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.

Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.

Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books.