Nine out of ten high-risk pension funds fail to beat the FTSE 100 over five years

Almost nine out of 10 high-risk pension funds have failed to match the performance of the FTSE 100 over the past five years, according to a new analysis that raises new concerns about the effects of retirement on millions of thanks.

Research by Investing Insiders examined nearly 13,000 personal and workplace pension funds holding more than £1tn in assets between December 31, 2020 and December 31, 2025. Funds in the highest and highest risk categories were benchmarked against 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 high-risk categories performed below that benchmark. Of the 7,370 funds analyzed for these risk levels, 6,540 failed to match the index.

The worst-performing fund in the study, Zurich Assurance’s Zurich JPM Emerging Europe Equity Pn ZP GTR in GB, lost 98.59 percent of its value over five years. A £50,000 investment in that fund would now cost just £705 – less than £91,000 less than if the same amount had tracked the FTSE 100.

Other underperformers include funds linked to the falling Woodford Equity Income scheme and several UK property-focused vehicles, many of which have suffered heavy losses during periods of market stress.

All 10 worst-performing funds were classified as high risks, and 87.6 percent of the 1,418 funds in that bracket failed to beat the benchmark.

By contrast, the best-performing fund in the study – UK’s Aviva Life & Pensions Aviva Pen Ninety One Global Gold Pn S6 GTR in GB – delivered a return of 180.28 per cent over five years, growing from £50,000 to £140,140.

Investing Insiders estimates that the gap between the best performers and the worst performers could be as much as a difference of £139,000 on a donation of £50,000 over the same period.

Antonia Medlicott, founder of Investing Insiders, described the findings as shocking. “Some funds in the same risk category are almost tripling, while others are losing value,” he said. “Savers often think their pensions are going slowly, but performance can vary greatly.”

He pointed out that more transparency is needed from suppliers, especially if the funds are not performing well in benchmarks over time. He also urged people to play a more active role in revising their pension allocations.

Although the FTSE 100 is the most widely recognized index, the pension portfolio is generally diversified across the world’s stock prices, bonds and other assets. As such, some fund managers argue that a direct comparison with a single UK index may not fully reflect an investment strategy.

Still, the level of inefficiency revealed in the report underscores the impact of asset allocation, fund selection and risk profile on long-term retirement savings.

Since retirement outcomes are highly dependent on defined contribution plans, the findings add weight to the call for automated fund creation and clear communication to help savers avoid large deficits in later life.