The majority of UK adults only have moderate expectations for their pension returns and prioritise stability in their retirement savings over higher-risk investments, a new survey by PensionBee, a global leader in the consumer retirement market, has revealed.
The survey1 sheds light on the public’s outlook on pension performance, tolerance for market fluctuations and habits around reviewing pension performance.
The findings show that over one-third of respondents (34%) believe a realistic annual return on their pension lies between 5% and 7%. This expectation is consistent across age groups, with 34% of those aged 18-54 and 37% of those 55 and over suggesting the same.
Meanwhile, only a small percentage (8%) of respondents expect returns exceeding 10%, indicating measured hopes for long-term growth, but still at a rate that should outperform typical interest rates on savings accounts.
Nearly six in ten respondents (59%) expect an annual return of over 5% on their pension investments. This expectation is more prevalent among those aged 18-54, with 60% holding this view. However, 55% of respondents aged 55 and over share the same expectation, despite higher returns being less realistic for this age group. These figures highlight a potential gap in understanding about the likely returns for older individuals nearing retirement.
Table 1: What annual return do you consider to be a realistic good performance for your pension?
| Pension performance % annual returns | All respondents | Respondents aged 18 - 54 | Respondents aged 55 and over |
|---|---|---|---|
| Up to 3% | 2% | 2% | 2% |
| 3% - 5% | 21% | 21% | 19% |
| 5% - 7% | 34% | 34% | 37% |
| 7% - 10% | 17% | 17% | 13% |
| More than 10% | 8% | 9% | 5% |
| Not sure | 18% | 17% | 24% |
When it comes to short-term fluctuations, nearly one-third (32%) of respondents are willing to tolerate up to a 5% variation in their pension value within a year. This sentiment is echoed by 32% of younger participants and 31% of those aged 55 and above. However, a significant portion of the older demographic (32%) prefers complete stability, indicating a more conservative attitude toward pension management as retirement approaches.
Table 2: How much short-term fluctuation (e.g. within a year) are you willing to tolerate in your pension’s value?
| Short-term (within a year) fluctuation tolerance | All respondents | Respondents aged 18 - 54 | Respondents aged 55 and over |
|---|---|---|---|
| None I prefer stability | 29% | 29% | 32% |
| Up to 5% | 32% | 32% | 31% |
| 5% - 10% | 18% | 18% | 17% |
| 10% - 15% | 4% | 4% | 4% |
| More than 15% | 1% | 1% | 2% |
| Not sure | 16% | 16% | 14% |
In terms of how frequently people review their pension performance, the survey reveals that an annual review is the most common practice, with 30% of respondents indicating they assess their pensions once a year. This trend is slightly more prevalent among younger participants (31%) compared to their older counterparts (28%). Additionally, 17% of all respondents said they review their pensions monthly.
Notably, older respondents demonstrate greater trust in their pension providers, with 23% relying on them to monitor performance, compared to only 13% of those aged 18-54. This trust underscores the importance of clear and transparent communication from pension providers to ensure confidence in retirement planning.
Table 3: How often do you review the performance of your pension?
| Review pension performance | All respondents | Respondents aged 18 - 54 | Respondents aged 55 and over |
|---|---|---|---|
| Monthly | 17% | 17% | 17% |
| Quarterly | 23% | 24% | 17% |
| Annually | 30% | 31% | 28% |
| Less often than annually | 12% | 12% | 10% |
| Only when there is a major market event | 4% | 3% | 6% |
| I rely on my pension provider to monitor performance | 15% | 13% | 23% |
Clare Reilly, Chief Engagement Officer at PensionBee, commented:
“These findings underscore the delicate balance that many savers are trying to achieve between growth and stability in their pension investments. It’s important to remember that the returns savers see are influenced by market fluctuations, and periods of both growth and decline are to be expected.
“While the returns we see today may not be replicated year after year, over the long term, pension investments are designed to smooth out these ups and downs. The goal is to consistently outpace inflation and provide the returns that meet savers’ long-term expectations, ensuring they can enjoy a happy retirement.”
Footnotes
1. The survey results are based on the responses of 1,000 UK residents – aged 18-66. The survey was run in September 2024.
