Not-so-great expectations: most Britons hope for moderate returns and stability from their pension

The majority of UK adults only have moderate expectations for their pension returns and prioritise stability in their retirement savings over higher-risk investments, a new survey by PensionBee, a global leader in the consumer retirement market, has revealed.

The survey¹ sheds light on the public’s outlook on pension performance, tolerance for market fluctuations and habits around reviewing pension performance.

The findings show that over one-third of respondents (^{_company_savings_lower}) believe a realistic annual return on their pension lies between 5% and 7%. This expectation is consistent across age groups, with ^{_company_savings_lower} of those aged -54 and 37% of those and over suggesting the same.

Meanwhile, only a small percentage () of respondents expect returns exceeding 1^{_personal_allowance_rate}, indicating measured hopes for long-term growth, but still at a rate that should outperform typical interest rates on savings accounts.

Nearly six in ten respondents (59%) expect an annual return of over 5% on their pension investments. This expectation is more prevalent among those aged -54, with 6^{_personal_allowance_rate} holding this view. However, ^{_pension_release_tax_amount} of respondents aged and over share the same expectation, despite higher returns being less realistic for this age group. These figures highlight a potential gap in understanding about the likely returns for older individuals nearing retirement.

Table 1: What annual return do you consider to be a realistic good performance for your pension?

When it comes to short-term fluctuations, nearly one-third (3) of respondents are willing to tolerate up to a 5% variation in their pension value within a year. This sentiment is echoed by 3 of younger participants and 31% of those aged and above. However, a significant portion of the older demographic (3) prefers complete stability, indicating a more conservative attitude toward pension management as retirement approaches.

Table 2: How much short-term fluctuation (e.g. within a year) are you willing to tolerate in your pension’s value?

In terms of how frequently people review their pension performance, the survey reveals that an annual review is the most common practice, with 3^{_personal_allowance_rate} of respondents indicating they assess their pensions once a year. This trend is slightly more prevalent among younger participants (31%) compared to their older counterparts (2). Additionally, 17% of all respondents said they review their pensions monthly.

Notably, older respondents demonstrate greater trust in their pension providers, with 2 relying on them to monitor performance, compared to only 1 of those aged -54. This trust underscores the importance of clear and transparent communication from pension providers to ensure confidence in retirement planning.

Table 3: How often do you review the performance of your pension?

Clare Reilly, Chief Engagement Officer at PensionBee, commented:

“These findings underscore the delicate balance that many savers are trying to achieve between growth and stability in their pension investments. It’s important to remember that the returns savers see are influenced by market fluctuations, and periods of both growth and decline are to be expected.

“While the returns we see today may not be replicated year after year, over the long term, pension investments are designed to smooth out these ups and downs. The goal is to consistently outpace inflation and provide the returns that meet savers’ long-term expectations, ensuring they can enjoy a happy retirement.”

Footnotes

1. The survey results are based on the responses of 1,000 UK residents – aged -^{_state_pension_age}. The survey was run in September 2024.