This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing as at Q2 2025.
In the third quarter, global stock markets performed well thanks to economic growth and strong company earnings, with many US companies reporting higher profits than expected. UK government bonds faced uncertainty due to potential long-term tariff impacts on inflation, while the Chair of the US Central Bank hinted at lowering interest rates, which positively affected global stock markets. Elsewhere, Europe experienced political instability due to concerns about government debt sustainability in France.
Keep reading this article for the Q3 market update and performance in your PensionBee Plan and its key asset classes. For the September market update, see our latest blog.
The performance data covers both Q3 (1 July to 30 September 2025) and year-to-date (1 January - 30 September 2025) and is sourced from our money managers. Figures are before fees and past performance is not a guarantee of future performance.
PensionBee’s default plans
4Plus Plan
The 4Plus Plan is managed by State Street with an equity proportion of 77.8%^. It’s the default plan for our customers over 50 years of age. The plan is actively managed for volatility in times of market turbulence, whilst targeting an annualised 4% return above the Bank of England base rate over a minimum five-year period. It aims to balance certainty with stability for those approaching retirement or making regular withdrawals.
^Equity % at 30 September 2025, asset allocation can change on a weekly basis due to the plan’s actively managed component.
Global Leaders Plan
The Global Leaders Plan is managed by BlackRock with an equity proportion of 100%. It’s the default plan for our customers aged under 50. The plan invests in around 1,000 of the largest public companies globally. It aims to maximise the growth of pension savings in the years before retirement.
^The plan was launched in February 2025, so the year-to-date figure isn’t available and has been replaced by since inception. Additional performance data for the 3-year and 5-year periods is also unavailable.
PensionBee’s specialist plans
Climate Plan
The Climate Plan is managed by State Street with an equity proportion of 100%. The plan follows a Paris-Aligned Benchmark and aims to reduce the total carbon emissions produced by the plan’s companies by at least 10% each year.
^The new Paris-aligned strategy was launched in September 2024, so performance data for the 3-year and 5-year periods is currently unavailable.
Shariah Plan
The Shariah Plan is managed by HSBC and traded by State Street with an equity proportion of 100%. The plan invests in the 100 largest stocks traded globally that also comply with Shariah investment guidelines, as set by an independent Shariah Committee.
PensionBee’s other plans
Tracker Plan
The Tracker Plan is managed by State Street with an equity proportion of 80%. The remaining 20% is allocated to fixed income. The plan offers a cost effective way to follow global markets as they move.
Pre-Annuity Plan
The Pre-Annuity Plan is managed by State Street with a fixed income proportion of 100%. The plan invests in bonds to provide you with returns that broadly correspond with the cost of purchasing an annuity. PensionBee is retiring this plan in Q4 2025.
Preserve Plan
The Preserve Plan is a money market fund managed by State Street. The plan makes short-term investments in highly creditworthy companies to preserve money.
Learn more about how your pension is invested
Your pension is invested in a range of assets like equities (also known as ‘company shares’ or ‘stocks’), bonds, property and cash. Your pension balance fluctuates depending on how these assets perform. See below for a summary of global markets and the performance of key asset classes in Q3 2025.
Global market summary in Q3 2025
In the third quarter, investors felt positive about global stock markets reaching new highs. This was due to economic growth and companies reporting high earnings. By late July, about 83% of S&P 500 companies reported higher earnings than expected. (The S&P 500 is an index that tracks the performance of 500 of the largest public companies in the US.) This supported market growth throughout the quarter. Meanwhile, UK government bonds (also known as ‘gilts’) posted a cautious outlook. This was due to uncertainty about how US tariffs might affect UK inflation in the long term.
In August, central bankers met in Wyoming, US (known as the Annual Jackson Hole Symposium). Global stock markets, including in the US and China, climbed up again after Jerome Powell (Chair of the US Central Bank) hinted at lowering interest rates in September.
On the other hand, Europe faced political instability. Former French Prime Minister François Bayrou lost a vote of confidence and was replaced by Sébastien Lecornu. This is because François Bayrou suggested spending less and raising taxes in 2026. The French government was worried that France might not be able to pay off its debt in the future.
How did global stock markets perform in Q3 2025?
Asian stock markets led global performance during the quarter, with the MSCI Asia ex-Japan Index (an index that tracks the performance of large and mid-size public companies across Asia, excluding Japan), posting an impressive 11.1% return. The rally was primarily driven by strong gains in tech stocks across the region, supported by surging demand for AI infrastructure and improving trade dynamics that reduced tariff risks. Notably, the weakening US dollar further enhanced the competitiveness and earnings of export-oriented Asian markets, particularly in tech-heavy economies like China, Taiwan and South Korea.
In the US, the S&P 500 delivered strong gains of over 8%, reaching multiple new highs during the quarter. This performance was underpinned by outstanding earnings results from the majority of large-cap companies, particularly from the Information Technology and Communications sectors. A significant contributing factor was again the weakening US dollar, which boosted the overseas earnings of US multinational companies. Additionally, markets priced in a highly anticipated 0.25% Federal Reserve (US Central Bank) interest rate cut at the September meeting, providing further growth to equities.
The UK also delivered a strong performance for the quarter, with the FTSE 100 (an index that tracks the performance of 100 largest UK public companies) up 7.5%, its strongest quarterly gain since 2022. A weaker British pound lifted overseas earnings for global companies in oil, healthcare, and mining. Defence stocks rose due to high demand, with ongoing geopolitical tensions and rising defence budgets. As well as non-essential consumer goods, equities saw solid returns, supported by the Bank of England’s (‘BoE’) interest rate cut, thereby increasing spending with hopes of easing inflation.
In contrast, the MSCI Europe ex-UK (an index that tracks the performance of large and mid-size public companies in Europe, excluding the UK) rose just 2.8%, lagging behind other markets. Sluggish growth in the Eurozone, underwhelming performance in German stocks, and ongoing political uncertainty in France muted investor sentiment and limited gains across the region.
Please note that the performance figures above are reported in local currencies, except for the MSCI Asia ex-Japan, which is reported in USD due to the use of multiple currencies among its constituents.
The bar graph below shows US exposure and quarterly performance for our 100% equity and multi-asset plans. US stocks, largely driven by AI-related gains, boosted returns, especially for equity-heavy plans. However, despite strong quarterly returns for all plans, year-to-date results do differ, highlighting that short-term performance shouldn’t drive long-term investment choices.
^The 4Plus and Tracker Plans are multi-asset funds, and all others are 100% equity funds. The Preserve and Pre-Annuity Plans do not have exposure to US stocks, as they are composed of cash and fixed-income assets, respectively.
Key themes in the stock market over the quarter included AI infrastructure investment, interest rate cuts from central banks, and strong sector performance. While resilient earnings and easing trade tensions lifted sentiment, concerns are rising about the sustainability of AI-driven growth.
How did UK bond markets perform in Q3 2025?
UK bond investors remained cautious despite a 0.25% BoE interest rate cut in August. Gilts fell -0.8%, while corporate bonds rose just 0.8%. The 30-year gilt yields hit their highest levels since 1998, a trend also mirrored in UK investment-grade corporate bonds.
Two main factors driving this underperformance were persistently high inflation, with the August Consumer Price Index (‘CPI’, a metric used to measure the UK inflation) at 3.8% (the highest since January 2024), and increased uncertainty around inflation. Ongoing tariff-related pressures since April have kept inflation elevated, undermining investor confidence in the near-term outlook and limiting the effectiveness of policy easing.
Long-term gilt yields reflect persistent inflation pressure
The graph below shows how UK inflation and long-term gilt yields moved through 2025. Inflation, measured by CPI, has risen since April’s US Liberation Day Tariff announcement. The full impact of these tariffs on prices remains unclear, creating uncertainty for investors.
Bond markets tend to react negatively when the outlook for inflation is uncertain, as it is today, prompting a selloff in long-dated gilts. As a result, 30-year gilt yields climbed to their highest level since 1998, reflecting investors’ caution about persistent inflation and long-term fiscal pressures.
Looking ahead, UK bonds face a cautious outlook. Persistent inflation uncertainty may keep yields elevated despite further interest rate cuts. Additionally, the upcoming Autumn Budget in November will influence market sentiment, especially if fiscal measures add pressure to inflation expectations.
As of 30 September 2025, PensionBee’s Tracker Plan has 4.73% of its funds invested in long-dated gilts (over 10-year maturity).
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? Learn more about the top 10 holdings in your pension fund on our blog, which is regularly updated. You can also look at our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invested. This information should not be regarded as financial advice.
