27/05/2026
Your pension is primed to let you down at the worst possible time
Some of the most popular workplace funds aren’t even keeping pace with inflation
May 26 2026, The Times
If you are approaching retirement you probably have a pension you have forgotten about, or maybe two. Possibly even three. Each one in a different workplace scheme, chosen by a former employer through a negotiation you were never part of, invested in a default fund you have never looked at, earning returns you have never compared with anything.
The system was clearly not designed to help you find out about, or monitor performance. If it had been there is no way the dreadful figures on pension performance in the five years to retirement would have been allowed to stand.
The analyst CAPAdata tracks the performance of UK workplace pension default funds and its figures show what has been happening to workers’ pension returns in the five critical years before they retire, known as pre-retirement. This is when the stakes are highest and there is little time to recover from a bad decision.
• How 49 people control £168bn of our workplace pensions
They should alarm anyone who has a pension in this country.
The best performing pre-retirement fund in the dataset over the five years to March 2026 was the SEI Flexi Default, growing at a compound annual rate of 9.5 per cent — impressive. The worst was Scottish Widows, at a miserable 3.6 per cent a year, a rate that did not even keep pace with inflation.
Many of the names that you are likely to recognise are clustered at the bottom. The Legal & General Target Date fund, one of the most widely used defaults in the country, averaged 3.6 per cent a year. People’s Pension, covering millions of lower and middle-income workers through auto-enrolment, averaged 3.8 per cent. Royal London averaged 4.6 per cent.
The industry average five-year return was 5.5 per cent a year and every one of those household names was below it. These are the funds millions of British workers were placed into, without their meaningful input and without anyone being required to tell them how their fund stacked up against the alternatives. Oh, and those figures are all before charges. Which makes them worse.
Consider what was happening to prices and investment markets globally during those same five years. UK cumulative inflation ran at about 30 per cent, or about 4.85 per cent a year, one of the most punishing inflationary periods since the 1990s.
Meanwhile comparable UK investment funds were delivering far stronger returns. The opportunity was there within the mainstream UK investment universe, why did it pass so many savers by?
It does not require your employer to explain why they chose it. The Pension Schemes Bill will introduce a value-for-money framework requiring funds to publish comparable performance data, but it is not expected to be fully operational until 2028.
