{"id":105173,"date":"2025-08-29T10:47:06","date_gmt":"2025-08-29T10:47:06","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/105173\/"},"modified":"2025-08-29T10:47:06","modified_gmt":"2025-08-29T10:47:06","slug":"how-to-spot-if-your-workplace-pension-is-underperforming-and-unlock-thousands-for-your-retirement","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/105173\/","title":{"rendered":"How to spot if your workplace pension is underperforming – and unlock thousands for your retirement"},"content":{"rendered":"

Over 20m UK adults are currently contributing to a workplace pension<\/a>, and for many of them, it\u2019s the main component of their retirement<\/a> plans.<\/p>\n

As such, the growth rate that their workplace pension achieves can have a material impact on their financial security in their later years.<\/p>\n

For example, if someone contributed \u00a3250 (including tax relief) to a pension every month for 45 years, a 5 per cent growth rate would see their pot grow to just under \u00a3495,000. A 4 per cent growth rate would see their pot grow to under \u00a3373,000 \u2013 nearly 25 per cent less due to the power of compounding<\/a>.<\/p>\n

These figures are concerning, but what\u2019s more concerning is that many Brits don\u2019t know what growth rate their workplace pension is achieving<\/a>, and whether it\u2019s underperforming or not.<\/p>\n

Here\u2019s how to find out – and what you can do if it\u2019s behind the curve.<\/p>\n

Checking your pension performance<\/p>\n

Assuming you have a defined contribution pension (the most common type in the UK), your pension provider must send you an annual pension statement. It tells you:<\/p>\n

The total contributions made into your pension<\/a>The amount you\u2019ve paid in feesThe change in your pension value over the yearThe retirement<\/a> income your pension is currently forecast to provide<\/p>\n

If you don\u2019t have a recent pension statement, you can ask your provider for one. Many providers also offer this information through your online account. Make sure to look at the growth your pension has achieved over several years, not just one.<\/p>\n

Broadly speaking, investors who are many years from retirement hope to achieve average annual growth of 5-7 per cent. Pension performance benchmark analysis released by PensionBee reveals that, over the last five years, a pension saver thirty years from retirement will have seen annual growth of 7.72 per cent, on average.<\/p>\n

Those close to retirement \u2013 who need to prioritise wealth preservation over growth \u2013 will usually aim for a lower growth rate.<\/p>\n

PensionBee\u2019s analysis shows that savers nearing retirement will have seen average annual growth of 5.27 per cent in the last five years.<\/p>\n

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Why workplace pensions underperform<\/p>\n

If your pension is underperforming, it\u2019s most commonly because you\u2019re investing in a fund that\u2019s too low risk for your circumstances<\/a>, likely because you haven\u2019t chosen an alternative.<\/p>\n

Pension providers typically offer several funds and allow members to select the one that\u2019s right for them. There will be higher-risk options, lower-risk options, and balanced options. Investors many years from retirement should usually consider higher-risk options that have the best growth potential.<\/p>\n

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open image in gallery<\/p>\n

(Getty Images)<\/p>\n

However, many people don\u2019t make a selection, meaning they remain in their provider\u2019s default option, which is usually the balanced fund. By design, these tend to achieve a lower growth rate than the higher-risk options.<\/p>\n

For example, if you\u2019re one of approximately 13m people who have a pension with Nest Pensions<\/a>, you will have been invested in a Nest Retirement Date Fund when you joined, which aims to \u201cbeat any rises in costs of living over time, but also add an extra 3 per cent on top\u201d.<\/p>\n

This is at the lower end of the range most pension savers hope to achieve.<\/p>\n

Nest also offers a Higher Risk Fund, which has a specified goal \u201cto grow your fund more than the Nest Retirement Date Funds\u201d \u2013 but you\u2019ll only be invested in this if you actively choose it. According to Nest, over 99 per cent of members remain in the default fund.<\/p>\n

What you can do<\/p>\n

With many of the UK\u2019s largest workplace pension providers \u2013 like Nest, The People\u2019s Pension, Aviva and Aegon \u2013 you can easily switch out of the default fund to a higher-risk one, if you decide that\u2019s appropriate for you.<\/p>\n

Remember: it\u2019s important to take enough risk while you\u2019re young, but it\u2019s just as important to reduce your risk as retirement approaches, so you\u2019ll need to review your pension regularly across that time.<\/p>\n

If your workplace pension doesn\u2019t allow you to choose your fund, a second option would be to open a self-invested personal pension<\/a> (SIPP).<\/p>\n

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open image in gallery<\/p>\n

(Getty Images\/iStockphoto)<\/p>\n

Don\u2019t close your workplace pension: you\u2019ll still need it if you want to benefit from your employer\u2019s contributions as well as your own. However, you may be able to make periodic transfers from your workplace pension into the SIPP, where you\u2019re free to make your own decisions about how to invest the money.<\/p>\n

Check your workplace pension documentation to see if partial transfers are allowed, and check there\u2019s no fee to make them. <\/p>\n

If you\u2019re not confident making your own decisions about how your pension is invested, you can seek advice first from a qualified and regulated pensions adviser. Look for one that charges a one-off fee for this advice, rather than an ongoing charge. Note that you may be able to access workplace pensions advice through your employer.<\/p>\n

When investing, your capital is at risk and you may get back less than invested. Past performance doesn\u2019t guarantee future results.<\/p>\n","protected":false},"excerpt":{"rendered":"Over 20m UK adults are currently contributing to a workplace pension, and for many of them, it\u2019s the…\n","protected":false},"author":2,"featured_media":105175,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[45,49,48,133,131,132],"class_list":["post-105173","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-ca","tag-canada","tag-finance","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/105173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=105173"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/105173\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/105175"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=105173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=105173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=105173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}