Pension funds are delivering more sizeable returns than UK savers had been expecting with average annual growth during five years reportedly nearing 8% for those 30 years from retirement. This, according to an update from PensionBee.
PensionBee’s Pension Performance Benchmark analysis, which has reportedly examined a number of major UK pension providers, indicates that savers would be underestimating the potential growth of their pensions, as an earlier PensionBee survey revealed that over a third of savers – aged 18 to 54 – expect returns anywhere between 5% and approximately 7%.
This latest research / analysis of pension fund performance – using industry data provided in Corporate Adviser’s Master Trusts and GPP Defaults Report – indicates that large pension funds have provided an average annual return of 7.72% during the last 5 years for those 30 years from retirement.
This is reportedly greater than the 5% to 7% returns anticipated by more than one-third (34%) of British savers – a stat that is matched by those aged 18 to 54 – according to United Kingdom’s online pension provider PensionBee’s survey.
PensionBee further noted that for savers nearing retirement, the picture is more moderate/balanced, with average returns of 5.27% during the same time period.
This performance is said to align closely with public expectations, as the survey revealed 37% of those 55 and over, think that a realistic return is somewhere between 5% and 7%.
The research study findings indicate that although pension growth may be considerable during a longer time horizon, UK savers’ expectations are pretty much in line with the actual performance of funds closer to retirement.
While these results seem somewhat positive, it’s worth noting that many UK savers are still finding it difficult to plan for retirement due to the ongoing cost-of-living crisis, inflation, and overall rise in the cost of goods and services. However, this is more of a global trend and governments would need to improve their strategies in order to help those nearing retirement.