Think your pension is doing fine? Think again.
I’ve long suspected savers aren’t always getting good value from their pension funds. But when my team and I ran the numbers, even I was surprised.
We found the worst-performing funds lost almost all of their investors’ money over five years. What matters more to me, though, is whether anyone will actually heed this and examine their own pension. In my experience, most people have little idea what funds they’re invested in. In fact, many don’t even realise their pension is invested at all.
I’m talking about defined-contribution pensions, which you can pay into through a workplace scheme or via a self-managed pot. They’re typically invested across a broad mix of assets, including a range of funds and safer options like cash.
Automatic enrolment has made these schemes the backbone of retirement saving for many. But getting people enrolled was only step one. The real challenge is engagement, and that’s where we’ve fallen short.
In our high-risk fund category, five-year returns ranged from a gain of 180% at the top end to a loss of nearly 99% at the bottom.
Minus ninety-nine per cent.
That’s not merely underperformance. That’s almost complete erosion of capital.
To illustrate: if Person A had invested £50,000 in December 2020 into the best-performing fund in our analysis, Aviva’s Ninety One Global Gold Pension, which delivered 180.28% over five years, their pot would have grown to £140,140 by the end of 2025.
If Person B had placed the same £50,000 into the worst performer in our data, the Zurich JPM Emerging Europe Equity fund, which lost 98.59% over the same period, they would be left with just £705.
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Both funds sit in the same high-risk category. Both would have been offered to savers willing to tolerate volatility. Yet the outcomes could not be more different.
Extend that logic further. If those returns persisted for 20 years, Person A could have about £3,085,590. That’s the power of compounding when returns are exceptionally strong. Person B would effectively have nothing left—two-tenths of a penny. wiped out.
Admittedly, these are dramatic extremes — and in the JPM Emerging Europe Equity case, the loss largely stemmed from the fund being suspended in February 2022 after sanctions followed Russia’s invasion of Ukraine — but they’re not hypothetical. While no pension plan would invest in a single fund unless requested, these are real funds holding real people’s savings.
High-risk funds tend to be heavily equity-weighted and therefore more volatile. That’s understood. If you’re decades from retirement, you may reasonably tolerate short-term bumps.
But a 98.59% loss over five years requires more than patience. It requires starting over.
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This reality raises uncomfortable questions. If someone’s money has been left in a fund that has nearly wiped itself out, has anyone reached out to them? Has there been an explanation of what happened, a review of whether that level of risk is appropriate, or a discussion of alternatives? Or do statements keep arriving, dense with jargon and benchmarks, giving a surface-level reassurance while masking alarm?
Even in the medium-risk category, the picture is sobering. Five-year returns ranged from a 79.81% gain to a 46.31% loss. Nearly half a pension vanishing in a fund labelled “balanced.”
When savers select a medium-risk option, do they envision losing 46% of their money in five years? I doubt it.
The low-risk category showed less dramatic divergence, as you’d hope, with gains up to 7.17% and losses down to 5.1% over five years. But even a small loss isn’t merely a paper value. It’s five years without meaningful growth, and that opportunity cost hurts, especially in the early years when compounding does much of the heavy lifting.
Risk isn’t a checkbox exercise. Too much risk as retirement nears can leave you with little time to recover from a downturn. Too little risk too early can cap long-term growth. Over decades, the difference can amount to tens of thousands of pounds.
Fees also matter. Our figures reflect fund performance, not platform charges. Add higher fees to a poorly performing fund, and the damage compounds. I’ve spoken to savers who assumed their pension was“taken care of,” only to discover years later that weak returns combined with charges left them far behind where they expected to be.
This isn’t a call to panic. It’s not a suggestion to chase the fund that just topped the table. Past performance doesn’t guarantee future results.
But it is a clear prompt.
Check your situation.
Don’t assume the default scheme you were placed in years ago is still right for you. Don’t rely solely on the benchmark printed on your annual statement. Find out which funds you’re invested in, understand how much risk you’re taking, and know what you’re paying for.
Pensions are one of the few areas of personal finance where decisions made in the background can determine whether retirement feels comfortable or precarious.
Ignoring them may feel harmless. It rarely is.
Antonia Medlicott is the founder of the personal finance site Investing Insiders.
