Pension disaster as Britons could lose 'tens of thousands in retirement savings', shocking research finds

For most Britons, their workplace pension represents their primary source of retirement income, making these findings particularly concerning for those saving for their future.

The review found that 26 out of 29 major pension funds underperformed against the FTSE All Share tracker over a five-year period.

Major providers including Nest, Legal & General, and Aviva were among those examined in the analysis. Most workers are automatically enrolled in these default pension funds, often unaware they could be missing out on better returns elsewhere.

The investigation also revealed complex fee structures that can erode savings over time. Some providers charge fees on each contribution, on top of annual management charges.

Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.

These combined costs can significantly reduce the final pension pot value over a worker's lifetime. The default funds are typically designed for the average saver, which may not suit individual circumstances or retirement goals.

Antonia Medlicott, Founder and MD of Investing Insiders, said: "The latest findings on workplace pension performance should be a wake-up call for all pension savers.

"With 26 out of 29 funds underperforming the FTSE All Share tracker, it's clear that many savers are being let down by default options that don't deliver the returns they deserve.

"It's time for pension savers to demand better results. Staying in an underperforming fund for decades could cost you tens of thousands in retirement savings.

"Employers and providers must do more to educate savers on their options, but we as individuals also need to take action.

"Reviewing your funds' performance, understanding fees, and exploring better-suited options can significantly impact your financial future. A small effort today could mean the difference between struggling and thriving in retirement."

Tony Ross, Investing Insiders Advisory Board Member and Founder of Velocity Financial Planning, added: "Most people don't think twice when signing up with a new pension - you tick the default investment option, and you're done.

"But that seemingly simple choice could quietly cost you tens if not hundreds of thousands over time. Higher fees, lacklustre performance, or missed opportunities to take on a bit more risk can all chip away at your potential returns.

LATEST DEVELOPMENTS:

• Pensioners urged to claim extra £3,900 a year after 44,000 terminally ill lose Winter Fuel Payments
• Pensioners face 25 per cent tax hit after little known loophole change
• State pension means-testing 'on the cards' after £300 Winter Fuel Payment cut

"Investing Insiders' data is a reminder to take a closer look at your current funds and spend a little time upfront making informed decisions. A small effort now could mean a much more comfortable retirement later."

Meanwhile, Labour Chancellor Rachel Reeves has announced plans for what she calls the "biggest pension reform in decades". The Chancellor aims to consolidate the UK's 86 council pension schemes into several "pension megafunds".

The ambitious reforms are designed to boost economic growth by channelling billions into UK investments. These investments would target areas including energy infrastructure, technology start-ups and public services.

Speaking to the BBC, Reeves explained that current public sector pension funds are too small to generate adequate returns for British savers. However, some experts have cautioned that these proposed changes carry their own risks.