Like a lot of people, I have a string of relatively small pensions, all invested in different funds with a few different providers. I should add that I'm no longer paying into any of the ones I'm asking about here. All of them are "contribution" pensions, where I pay in, build up a 'pot' and can elect to invest that pot in various ways. The bigger the pot when I retire, the greater the income I'll receive from them.

I've been looking at the rate of return I'm getting, and trying to read the providers fund information to see if I should be considering moving investments around. This has proven incredibly complicated, not least because different providers (and even different funds) report different metrics, and those metrics don't seem to match up to my actual experience.

What I have managed to do is to get the 'balance' of all my pensions over at least the last 5 years (they issue statements around the same time each year). By looking at those balances, I can work out the gain/loss for each year, and the overall gain/loss over the full 5 years.

I see annual gains ranging from -7% to 37%, but over all my pensions, over 5 years seems to have been about 30% (which I make about 5-6% compound interest over that period). That's the last 5 years to now.

My question is... what sort of territory should my annual returns be in? Am I in around the right ball-park, or are my investments way off?

  • 1
    Do you pay in a fixed amount (defined contribution) or are you guaranteed a certain payout when you retire (defined benefit)? That will make a difference on what level of return you can get.
    – D Stanley
    Nov 12, 2019 at 13:21
  • Depending on the individual details of the pensions you may want to look at consolidating your multiple pensions into a single pot, particularly if any of them have fixed fees, or higher FMCs than others. While FMCs may seem small, small differences in FMCs can have oversized impacts on the actual compounding effect you see.
    – illustro
    Nov 13, 2019 at 15:38
  • Your age is relevant : a good pension scheme decreases risk as you approach your retirement age, but this will also decrease the effective interest.The zero-risk inflation-adjusted interest approaches 0% in Europe.
    – MSalters
    Nov 14, 2019 at 9:16

1 Answer 1


The returns any investor has achieved over the last 5 years depend a lot on what asset classes they've been exposed to. The more global equities (or US equities) the better. But if they've had a "home bias" to UK equities, or played it safe with a significant allocation to bonds, their returns will be less.

Here's some 5-year annualised total-return return numbers (from trustnet's charting):

Average performance of multi-asset funds in the IA (Investment Association). Generally these tend to have a lot of "home bias", although there are exceptions.

IA Mixed Investment 0-35% Shares:  3.7%
IA Mixed Investment 20-60% Shares: 4.7%
IA Mixed Investment 40-85% Shares: 6.5%

Vanguard's "LifeStrategy" multiasset passive funds (these give pretty good global exposure, but still have some "home bias"):

LifeStrategy 20%:  5.1% 
LifeStrategy 40%:  6.6%
LifeStrategy 60%:  8.2%
LifeStrategy 80%:  9.7%
LifeStrategy 100%: 11.2%    

100% Global equities:

Vanguard FTSE All World UCITS ETF: 11.9%

But if you were 100% in UK equities funds, annualised returns might have been more like this FTSE All Share index tracker (the index itself did 6.6%pa):

L&G UK Index Trust (I Acc):  6.5%

Just for fun, a few "big name" superstar fund managers (good and bad):

Lindsell Train Global Equity (B):  19.9%
Fundsmith Equity (T Acc):          18.6%
LF Woodford Equity Income (A Acc): -5.1% 

So if you've seen 5-6% annualised, my guess would be that you're either in some typically middle-of-the road "balanced" pension funds in the IA's "20-60% Shares" or "40-85% Shares" grouping, or 100% in UK equities but in funds which are slightly underperforming the index (perhaps due to costs). If my guess is correct and that is where you're invested, then your returns would appear to be "in the right ball park". But if you've actually been invested with a much higher exposure to US/global markets... then sorry you do not appear to have reaped the expected rewards from it.

  • Great and thorough answer, and thanks for clarifying some of the details I left out of the question! It looks like I should fiddle with the investments inside my pensions (with all that entails!). Thanks :-) Nov 13, 2019 at 12:37

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