UK Pension Funds in Crisis: Savers Face Massive Losses Up to £139,000
A comprehensive new study has exposed a devastating trend in the UK pension industry, revealing that millions of British savers are losing substantial sums from their retirement pots due to widespread fund underperformance. The analysis, conducted by Investing Insiders, examined nearly 13,000 personal and workplace pension funds holding over £1 trillion in investments between December 2020 and December 2025.
Shocking Benchmark Failure Rates
The research found that an alarming 89% of medium-to-high risk pension funds failed to beat the FTSE 100 over the five-year period. During this time, the FTSE 100 grew by an impressive 84.67%, yet the vast majority of actively managed funds in higher risk categories could not match this performance. This suggests that many savers would have been significantly better off investing in simple, low-cost index tracker funds rather than paying for active management that consistently underperforms.
Catastrophic Losses for Worst Performers
The scale of underperformance has reached staggering proportions. Based on a £50,000 contribution, the gap between the best and worst performing funds has ballooned to a massive £139,000. While the top-performing fund nearly tripled in value, the poorest performers effectively wiped out decades of hard-earned savings.
The absolute worst performer was the Zurich JPM Emerging Europe Equity Pn ZP GTR in GB fund managed by Zurich Assurance, which lost an incredible 98.59% of its value over five years. A £50,000 investment in this fund would have dwindled to just £705, leaving the holder with almost nothing for retirement. This represents more than £91,000 less than if the same money had been invested in the FTSE 100 over the same period.
High-Risk Funds Consistently Underperform
Analysis of over 7,000 funds shows that 87.6% of those in the highest risk category failed to hit industry benchmarks. These funds are specifically designed for aggressive growth, making their consistent failure particularly alarming for investors who have entrusted their retirement savings to these products.
Extreme Volatility Within Same Risk Categories
While some funds experienced catastrophic losses, others flourished dramatically. Aviva Life & Pensions UK has the best performing fund overall, with its High risk Aviva Pen Ninety One Global Gold Pn S6 GTR in GB seeing returns of 180.28% over five years. Those with £50,000 in this fund would have seen its value increase to £140,140, which is 19,778% more than the worst performer.
This extreme volatility within the same risk categories highlights the critical importance of choosing the right provider and fund, as performance can vary dramatically even among funds with similar risk profiles.
Industry Experts Sound Alarm
Antonia Medlicott, founder and managing director of Investing Insiders, expressed serious concerns about the findings. "It's alarming to see the number of pension funds that are failing to hit benchmarks, leaving the holders thousands out of pocket," she stated. "Some of the poorest performers are effectively wiping out the future for the holders, whilst being in the same risk category as others, which are almost tripling investments in just five years."
Medlicott emphasized that people naturally assume their pension will be progressing at a good rate, so more needs to be done to inform them about fund volatility. She called for providers to keep users updated when performance drops below certain thresholds and to ensure that default schemes provide better value.
Take Control of Your Pension
Savers are being urged to take a more active interest in their pension's performance and risk level, rather than assuming it is progressing well. Your choice of fund should change dramatically depending on your age and proximity to your retirement goals.
Medlicott advised: "Whilst we believe changes should be made to help people, the results from our research highlight that individuals need to take it upon themselves to take more interest in their own pension performance, and the risk level it is set at. Depending on your age, retirement goals, and where you are in life, the fund you are in can and should change dramatically."
The Ten Worst Performing Pension Funds
According to the Investing Insiders analysis, these are the ten worst performing pension funds in the UK between December 2020 and December 2025:
- Zurich Assurance: Zurich JPM Emerging Europe Equity Pn ZP GTR in GB (-98.59%) - £50,000 became £705
- Scottish Friendly Assurance: Scottish Friendly CL Woodford Equity Income Pn S4 GTR in GB (-91.46%) - £50,000 became £4,270
- Canada Life: Canlife UK Property Income Pn GTR in GB (-85.65%) - £50,000 became £7,175
- ReAssure Life: OMR Carnegie Rysslandfond GTR in GB (-85.23%) - £50,000 became £7,385
- Canada Life: Canlife UK Property Pension GTR in GB (-83.93%) - £50,000 became £8,035
- Phoenix Wealth: Phoenix Wealth LF Woodford Equity Income Pn S4 GTR in GB (-78.71%) - £50,000 became £10,645
- Phoenix Wealth: Phoenix Wealth LF Woodford Equity Income Pn GTR in GB (-78.2%) - £50,000 became £10,900
- Phoenix Wealth: Phoenix Wealth LF Woodford Equity Income Pn S3 GTR in GB (-78.2%) - £50,000 became £10,900
- Zurich Assurance: Zurich LF Equity Income Pn ZP GTR in GB (-77.83%) - £50,000 became £11,085
- SSGA UK: SSgA UK Index Linked Gilt Mar 2068 Index Sub-Fund GTR in GB (-76.69%) - £50,000 became £11,655
The research organization has created a tool that allows Brits to compare their pension performance and determine whether they should be satisfied or concerned about their retirement savings trajectory.
