Pension funds in the UK are reportedly generating higher returns than many savers expect, as per recent research findings. The analysis indicates that leading pension funds have delivered average annual returns of 7.72% over the last five years for individuals who are three decades away from retirement. This figure surpasses the expectations of a significant portion of savers aged between 18 and 54, with over a third of them anticipating returns ranging from 5% to 7%.
The research conducted by PensionBee highlights that the best performing funds have all exceeded an 8% average return over a five-year period for younger savers. These top-performing funds are provided by companies such as Aviva, Nest, and PensionBee, the firm behind the research. For individuals closer to retirement, with just five years left until the state pension age of 66, the average returns were recorded at 5.25%, more in line with their expectations.
Chief Engagement Officer at PensionBee, Clare Reilly, underscores the significance of long-term planning and investment in pension funds. She emphasises the importance of actively engaging with pension plans and selecting providers that offer flexibility in investment strategies tailored to individual timelines and risk profiles. Reilly encourages savers to remain focused on their long-term goals to maximise growth opportunities and secure a comfortable retirement.
The research findings align with a separate study from earlier in September, which revealed that women are more inclined than men to keep their long-term savings in a standard savings account rather than in more profitable options like ISAs or pensions. Nearly half of women surveyed were reported to be holding funds earmarked for long-term goals in savings accounts, compared to 39% of men, according to Scottish Friendly’s Family Finance Tracker.
This research, conducted in collaboration with the Centre for Economics and Business Research, surveyed 2,600 individuals across the UK about their savings habits. It shed light on the differences in savings behaviours between genders and the preferred vehicles for long-term financial planning. The study’s outcomes serve as a reminder for individuals to review their saving and investment strategies to ensure they are optimising their financial future.