PensionBee is buzzing about pension performance stinging savers

Analysis by PensionBee reveals that pension funds are delivering better returns than many British savers expect. PensionBee’s Pension Performance Benchmark analysis found that leading pension funds have delivered an average annual return of 7.72%, over the past five years for those who are 30 years from retirement. This figure is higher than the 5% to 7% returns anticipated by over one-third of UK  pension savers.

How do these returns compare with savers’ expectations?

The performance exceeds expectations.

A previous PensionBee survey found that over a third of savers – aged 18 to 54 – anticipated returns of between 5% and 7%.

The actual performance of 7.72% is notably higher than these expectations.

But, are the returns different for those who are closer to retirement?

Yes, for savers nearing retirement, that’s those five years away from state pension age, the returns are lower. For this cohort, the average returns, over the same five-year period were 5.27%. This is more closely aligned with the expectations of those who are aged 55 and over. 37% of whom believe a realistic return on their pension savings, is between 5% and 7% according to PensionBee’s research.

Which pension fund showed the highest returns for those 30 years from retirement?

According to the data provided, PensionBee’s LifePath 2055-2057 Fund showed the highest annualized returns over five years at 10.7%, followed closely by Aviva Master Trust & GPP – My Future Universal strategy at 10.03%.

The analysis suggests that a longer investment window allows for greater market exposure and stronger returns. As savers approach retirement age, pension funds typically adopt more conservative strategies to protect accumulated savings, which can result in more moderate returns.

Clare Reilly, Chief Engagement Officer at PensionBee, emphasizes the importance of long-term planning and investment in pension funds. She encourages savers to remain focused on their long-term goals and make the most of growth opportunities while they’re still accumulating savings.

How can pension savers make the most of these potential returns?

The findings underline the value of continued engagement with pension plans and the importance of selecting a provider that offers flexibility in investment strategy based on individual timelines and risk profiles. Savers are encouraged to stay informed about their pension performance and consider their long-term retirement goals.

Does this analysis cover all pension providers?

The analysis examined returns from many leading pension providers, including Aegon, Aviva, LGIM, Nest, Now: Pensions, PensionBee, Royal London, Scottish Widows, and The People’s Pension. While it doesn’t cover every provider in the market, the research provides a good overview of major players in the industry.

The data used in the analysis by PensionBee ran up to December 31, 2023