Almost nine in 10 higher-risk pension funds have failed to keep up with the performance of the FTSE 100 over the past five years, according to new analysis, raising fresh concerns about the retirement prospects of millions of savers.
Research from Investing Insiders looked at almost 13,000 private and corporate pension funds that held more than £1 trillion in assets between December 31, 2020 and December 31, 2025. Funds in the medium to high and high risk categories were compared to the FTSE 100 over the same period.
The FTSE 100 delivered a cumulative return of 84.67 per cent over five years, turning £20,000 into £36,934 and £50,000 into £92,335.
In contrast, 89 percent of pension funds in the higher risk categories underperformed this benchmark. Of 7,370 funds analyzed at these risk levels, 6,540 failed to keep up with the index.
The worst-performing fund in the study, Zurich Assurance’s Zurich JPM Emerging Europe Equity Pn ZP GTR in UK, lost 98.59 percent of its value over five years. A £50,000 investment in this fund would now be worth just £705 – more than £91,000 less than if the same amount had tracked the FTSE 100.
Other underperformers included funds linked to the collapsed Woodford Equity Income strategy and several UK property-focused vehicles, many of which suffered heavy losses amid market stress.
All ten worst-performing funds were classified as high-risk funds, and 87.6 percent of the 1,418 funds in this category failed to outperform the benchmark.
In contrast, the best-performing fund in the study – Aviva Pen Ninety One Global Gold Pn S6 GTR in the UK from Aviva Life & Pensions UK – returned 180.28 per cent over five years, rising by £50,000 to £140,140.
Investing Insiders estimates that the gap between the best and worst performers could equate to a difference of £139,000 on a £50,000 contribution over the same period.
Antonia Medlicott, founder of Investing Insiders, called the results alarming. “Some funds in the same risk category are almost tripling their investments, while others are destroying value,” she said. “Savers often expect their pensions to rise steadily, but performance can fluctuate dramatically.”
She argued that greater transparency from providers was needed, particularly when funds underperformed their benchmarks for extended periods. She also urged individuals to take a more active role in reviewing their pension allocations.
While the FTSE 100 is a widely recognized benchmark, fixed income portfolios are typically diversified across global stocks, bonds and alternative investments. As a result, some fund managers argue that direct comparison to a single UK index may not fully reflect the investment strategy.
Nevertheless, the extent of underperformance highlighted in the report highlights the impact of asset allocation, fund selection and risk profile on long-term retirement planning.
As retirement prospects become increasingly reliant on defined contribution schemes, the findings underline calls for better default fund design and clearer communication to help savers avoid significant deficits later in life.
