Active fund choices of engaged scheme investors have beaten default fund returns by 4.89% a year over the past five years, according to latest figures.
Hargreaves Lansdown’s latest six monthly analysis looking at the choices of nearly 12,000 active members of workplace pension schemes making their own investment decisions, showed that improving an investment return by 1% a year means the average person saves £64,000 in contributions.
Hargreaves Lansdown senior pension analyst Nathan Long stated: “Default funds are a necessary element of auto-enrolment pensions but by their nature they are designed to be a conservative one-size-fits-all solution. For most people, better investment options are available.
“If the choice is between increasing the amount you pay into your pension every month, having to work a few more years, or making your pot grow faster by choosing better investments, most people would probably go for the latter option. Getting to grips with investing your pension can seem daunting, but many pension members are improving their retirement prospects by doing just that.
“Improving your returns by just 1% every year could save the average person £64,000 over a lifetime of pension saving. Getting started is easier than you think. Most investment brokers have their list of the top investment funds available and provide tips on how to choose something that suits you. If you need more help paying for financial advice can be worthwhile.”
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