Idle Savers, people who stay in default pension funds, are losing 4.75 per cent in returns every year, according to research from Hargreaves Lansdown.
Data from a survey of 58,000 workplace pension members show 47 per cent of people with a pension above £25,000 choose their investments. Comparatively, just 5 per cent of people with a pension pot under £5,000 are actively choosing funds.
Hargreaves Lansdown senior pension analyst Nathan Long says because default pensions funds are mostly conservatively managed, returns will lag. He says: “Many people don’t think of themselves as investors but as soon as you are put into a workplace pension, that is exactly what you become.”
Nearly a quarter (22 per cent) of scheme members choose their own investments, with people in their 40s most likely to do this.
Long says: “People tend to choose their investments after their pot has built up a little or they have been a scheme member for a number of years but you don’t have to wait. After all, it’s your money and the choices you make can massively boost your retirement prospects.”
The platform giant says £60,000 can be added to a pension pot by retirement by increasing investment returns by 1 per cent each year.
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