Average annualised returns on default pension funds for those approaching retirement fell from 5.73 per cent in 2023 to 4.91 per cent in 2024, falling short of the 5 per cent return most savers aged 55 and over consider a “good” return, according to PensionBee.

While some funds outperformed and others underperformed, PensionBee said the fall highlights a gap between savers’ expectations and the returns delivered by their funds.

PensionBee chief engagement officer, Clare Reilly, said these findings show some of the “continuing challenges” facing UK retirees, with average default fund returns falling just below the 5 per cent level that many would consider to be “good” performance.

She added that the results underscore the “delicate balance” savers must strike between growth and stability in their pension investments.

According to data from Corporate Advisers Master Trust and GPP Defaults Report 2024 and 2025, PensionBee’s default 4Plus Plan achieved an annualised return of 10.24 per cent in 2024, consistent with its 10.34 per cent return the previous year - more than double the market average.

Reilly said that the provider’s 4Plus Plan’s “consistent” double-digit returns, even in volatile markets, show that a carefully managed strategy can provide solid performance and added protection for those approaching or in retirement.

In contrast to PensionBee's returns, the research showed that the Aegon Workplace Default and associated retirement years fund fell 38.12 per cent from 7.03 per cent in 2023 to 4.35 per cent in 2024, while Legal & General’s Multi Asset Fund dropped 34.28 per cent over the same period.

Meanwhile, Now Pensions' Diversified Growth Fund recorded growth, rising from 3.30 per cent to 4.20 per cent, a 27.27 per cent gain.

Other funds experienced modest declines, such as Nest's 2040 Retirement Date Fund, which fell from 5.78 per cent to 5.36 per cent.

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