The best-performing workplace pensions could be adding £500,000 to savers’ pots, rankings suggest.
Nearly two million workers have their pension savings channelled into default funds chosen by their employer, but there are stark differences in the returns they generate. The analytics firm Corporate Adviser Intelligence looked at 15 of the largest workplace pension funds. In the ten years to the end of 2025 cumulative returns ranged from 232.3 per cent from Aon to 88 per cent from Now: Pensions and 89.7 per cent from Standard Life. For comparison, the MSCI World index of global stocks was up 318 per cent in that time.
Assuming annual charges of 0.5 per cent, this would have meant Aon’s fund returned an average of 12.8 per cent a year, Standard Life 6.6 per cent and Now: Pensions 6.5 per cent.
Researchers said the difference in default fund returns was mainly down to how much of the fund was invested in stocks and shares rather than in lower-risk assets such as bonds or property. The report said: “Diversified funds, designed to cushion members from downturns and to deliver in all market conditions, have lower equity exposure. They have therefore missed out on what has been an extraordinarily strong run for equities.”
Steve Webb, a former pensions minister now at the consultancy Lane Clark and Peacock, said: “In some cases schemes will have taken the view that their members could not cope well with volatile fund values and may have taken a more cautious approach to investing. This may leave them lower down the league table but doesn’t make them bad schemes.
“The best way for savers to respond to this information is to get their employer to engage with their pension scheme and ask for an account of their performance and how it compares with other schemes. Employers should also be nudged to keep their choice of workplace pension firm under regular review so that genuine poor performers are better held to account.”
What your pension could be worth
An employee with a starting salary of £30,000 with the minimum 8 per cent salary contribution (5 per cent from them, 3 per cent form their employer) would have £837,358 in their pot after 30 years in the Aon fund, assuming pay rises of 2 per cent a year and charges of 0.5 per cent a year. If the value of their pot was adjusted for inflation it would be worth £462,281 in today’s money.
Someone whose investments returned 6.5 per cent a year would have a pot worth £265,092 after 30 years (£146,350 in today’s money), according to the wealth manager Quilter.
Most workplace pensions are defined contribution (DC) schemes, where what you get in retirement depends on how much is paid in and how well your investments perform. Defined benefit (DB) schemes, which pay out a guaranteed income in retirement based on your career salary, are now rare outside the public sector. For DC schemes investment performance is everything.
The pensions consultancy Hymans Robertson said: “For those who are far away from retirement, outcomes are largely driven by the risk profile of the default investment strategies. Higher exposure to listed equity markets has generally supported stronger returns, despite periods of market volatility.”
The asset allocation of workplace pensions is decided by pension scheme trustee boards or insurance companies. Last week Times Money reported that 49 trustee board members across seven master trusts control £168 billion in workplace pension savings.
The Times’s Smarter with Money campaign wants to encourage more savers to invest in the stock market. Since the introduction of auto-enrolment in 2012, most private sector employees have become investors through their workplace pensions.
Those in a workplace pension have the option of taking more responsibility over their pension investments and not necessarily settling for the default fund. Your pension scheme will have alternative funds to choose from that you can diversify across, or an option to change your risk profile. Someone in their thirties or forties, for example, has enough time before retirement that they can afford to choose a “riskier” option or a higher allocation to stocks and shares rather than lower-risk bonds as may be the case in a more middle-of-the-road default fund.
Ian Futcher from Quilter said: “For a young person with a long time to invest, your pension savings should be invested heavily in equities as you have time to navigate the volatility, and these offer the best potential for inflation beating returns. However, default funds are designed as a one-size-fits-all investment, and while some do what is called lifestyling — derisking as they reach retirement age — they do not consider an individual’s circumstances or objectives. For example, you may wish to delay retirement, and thus such a fund will put you in lower-growth assets far too early.
“It is crucial that people engage with their pension at the earliest opportunity, and it is great to see campaigns like Smarter with Money looking to get people investing for their future.”
Standard Life said: “Our primary default strategy has changed considerably during the time frame in question. The data quoted uses a combination of current and historic default strategy performance figures, which are not representative of the performance a customer has experienced or the fund they are invested in today. We have taken several proactive measures to considerably improve net member outcomes in recent years.”
Now: Pensions said: “Our investment strategy has historically differed from peers, which contributed to a period of underperformance. In 2023 we had a comprehensive review of our approach and implemented several significant changes to our investment strategy. Since the beginning of 2024 performance has improved, with returns now ahead of our peer group. Our annualised three-year return to December 31, 2025, is 13.9 per cent, and we remain confident in our ability to deliver strong long-term outcomes for our members.”