Retirement is something we prepare for and look forward to for much of our working lives, but an underperforming pension can ruin your plans for later life.
It’s easy to forget to check in on your pension. In fact, nearly half of UK adults (47%) do not know how much is in their pension pot.1 But taking the pulse of your retirement savings is a key part of preparing for making the most of life after work.
But how can you find out if your pension is underperforming? And what measures can you take to get things back on track? Find out in our comprehensive guide.
How do you check your pension’s performance?
1. Find your pension(s)
Before you can measure your pension, you need to know where it is. If you already know, you can skip this step, but it’s common for people to lose track of retirement savings.
In 2024, the Pensions Policy Institute said £31.1bn was sitting in an estimated 3.3 million unclaimed pension pots.2 So, it might be worth checking, even if you think you know where your pensions are.
You may have workplace pensions from several different jobs if you have moved between employers in your career.
You may already know the details of your pension pots, or be able to track down paperwork or emails that point you towards your schemes. You can also find out pension scheme details by contacting your current or previous employers’ Human Resources department.
The government’s free Pension Tracing Service can also help hunt down lost pension details. Try calling 0800 731 0175 (or +44 (0)191 218 7777 if you are outside the UK) between 10 AM and 3 PM Mon-Fri.
Make sure you have important details, such as historic addresses and your National Insurance number, on hand to make searching as simple as possible.
2. Check your statement(s)
Once you know where your pension is, you can check on it. You can do this by:
- Reviewing annual statements sent to you by post or email.
- Logging in to your pension provider’s website.
- Contacting your pension provider and asking for more information.
Typically, checking online is the easiest way to get an instant and up-to-date snapshot of your pension fund. After logging in, you should be able to see the value of your pension, how much growth has been achieved, and how it has been invested.
3. What are your circumstances?
Now that you can see how much is in your pot, you need to think about what you want to use it for. Consider:
- Your retirement goals: You might want to travel, support family, pay off your mortgage or just maintain the same standard of living you have become accustomed to in your working life.
- Other income: Do you have benefits, a state pension, investments, rental properties, or other sources of additional income you can rely on when you stop working?
- Retirement date: When do you want to hang up your spurs and retire? Is there a hard stop, or do you plan to switch to part-time hours or more casual work?
Factors like this will influence how much you need to retire.
It’s hard to quickly put a price on how much retirement will cost, but the Retirement Living Standards initiative offers great insights about the current costs of maintaining different lifestyles in retirement.
Annual cost of different lifestyles in retirement
Source: https://www.retirementlivingstandards.org.uk/
Remember, these annual costs can be paid with your pension pot AND your State Pension, existing savings, and other income.
4. Rules of thumb
There are many ‘rules of thumb’ about how much you should aim to contribute to your pension pot, how much your pot should grow, or how large your pot should be at various life stages.
None of these are hard and fast rules, and different methods suit different savers. However, they can offer some perspective if you are feeling lost and want something to anchor your pension saving goals to.
For starters, let’s consider the amount you choose to contribute.
The two most commonly cited rules are:
- Half your age: An often cited rule is halving the age at which you start contributing to your pension. So if you started at 22, you should contribute 11%.
- 12-15%: A much simpler flat 12-15% contribution across your working life is suggested by many providers and schemes.
When considering contributions, remember that the % contribution level reflects the combined contributions of both employees and employers. For example, minimum auto-enrolment pension contributions are 8%. This is comprised of a 3% employer contribution and a 5% employee contribution.
However, your employer may match your pension contributions at higher levels. For example, if they match contributions up to 6%, you can make contributions of 12% by only diverting 6% of your salary to your pension savings.
Next, let’s think about growth.
Whether you are happy with your pension pot’s growth is subjective, but one quick way to check is to examine annual growth. If you are heavily weighted towards equities, look for 5-7% per year. If your pension is more conservatively invested (with heavier weighting towards bonds), 3-5% growth per year is a more reasonable benchmark to aim for.
Remember that markets can be volatile, and one or two years not meeting expectations is not necessarily cause for alarm. Pension savings are for the long term, so hitting the panic button because of one bad year may be an overreaction.
Finally, there’s the size of your pension pot.
Of course, this varies depending on circumstance, but the below was published as a rough guide to UK pension savers by Fidelity in its Global Retirement Savings Guidelines.3 It stands out as simple, to-the-point guidance that can apply regardless of earnings.
Why is your pension underperforming?
When you check your pension pot, you might be disappointed at its size or its lack of growth. This can be a blow, but it’s better to find this out now than at retirement. Checking the status of your retirement savings can be the first step to improvement. The next is diagnosing what’s wrong.
If you are not sure, it may be sensible to contact a qualified financial advisor for professional help.
If you want to evaluate your pension yourself, consider whether any of the following factors apply:
Poorly invested
Is your pension pot invested sensibly?
With most workplace pension schemes, your provider will automatically invest your pension for you. By default, your provider will typically invest in a mix of assets based on your age:
- In your early career (20s–40s): Heavier investment in higher risk assets like stocks (often 80–100%) to maximise long-term growth.
- Mid-career (40s–50s): A gradual shift to bonds and other lower volatility assets with less equity exposure.
- Nearing retirement (50s–60s): Further shift to bonds, gilts (UK government bonds), and cash-like assets as you get closer to taking your pension.
The basic idea is to maximise growth and manage risk across your working life. However, your risk tolerance might be different from what your provider has assumed. Maybe you want to remain heavily invested in equities into your mid-career and beyond in order to try and maximise growth.
You might also find you agree with the asset mix, but still think performance is lacking. Perhaps the equity-heavy fund your pension is invested in has seriously lagged behind the S&P 500. There may be alternatives offered by your provider, or by another provider you can transfer your pension to.
Just remember that the value of investments can go up or down.
You can gain some good perspective on how to build and maintain your pension pot at different stages in our guides to pension investing in your 20s and 30s, and retirement saving in your 40s and 50s.
Insufficient contributions
It may simply be the case that you have not contributed enough to your pension. Maybe one of the following could explain the issue:
- Out of work: If you have spent significant periods of your adult life out of work, your pension may have lagged behind due to a lack of contributions.
- Low contributions: You may not be contributing enough. Most workplace pensions exist on an auto-enrolment basis, where the minimum contribution is 8%. However, this may not be a high enough level to secure your retirement goals.
- Not enrolled: You may have opted out of your workplace pension scheme, or you are self-employed and have not started a pension in the first place.
Scattered pots
Having multiple pension pots can hamper growth for several reasons:
- Lost pots: If you have multiple pots, it’s more likely that you will forget about one and lose the money inside for good.
- Fees: If you have five pots with five different providers, you may be paying five different management fees.
- Poor management: Multiple pots are harder to manage too. Your pots may lack any real investment strategy, and it may be harder to work out if one particular pot is underperforming if you are trying to keep track of several at once.
High fees
Fees can erode a pension pot’s value over time, particularly if the pot is inactive, as referenced in the previous section. These may be referred to as ‘active member discounts’.
The most typical fee you will see is an annual management fee. Just because this fee is common does not mean it shouldn't be examined. When it comes to annual fees, even small percentage differences in fees can have a major impact over the long term, which is particularly important to bear in mind with pension saving.
In the example below, two entirely identical pension pots are subjected to different fees. The lower fee variant ends up better off to the tune of nearly £22,000. Not too shabby.
Always make sure to check whether you are being charged high fees.
Improving your pension’s performance
Switching providers
If you have identified that your current provider is charging high fees or managing your pension poorly, switching to another provider is an option. Do your research and check our guide to choosing the right pension plan.
Before switching, bear in mind that there can be disadvantages. Be careful to check exit fees and guaranteed benefits, and avoid transferring out of defined benefit schemes.
If you do decide to switch, you might even choose to transfer to a Self Invested Personal Pension (SIPP) provider to seize control of your pension and manage it yourself.
Consolidate your pension pots
If you have multiple scattered pension pots, consolidation could be the key to improvement. It can make your retirement savings easier to manage, cut down on the fees you pay, and allow you to pick a preferred provider.
However, as with switching providers, you should be careful to check exit fees and guaranteed benefits, and to avoid transferring defined benefit schemes.
You can transfer in and consolidate different pension pots at Freetrade.
Maximise your State Pension
While separate from your private pension, ensuring your State Pension is up to date may significantly improve your retirement income. You can check your State Pension online and pay voluntary contributions to improve the amount you will receive when you reach State Pension age.
Can a SIPP improve my pension?
With a Freetrade SIPP, you can choose how your retirement pot is invested. Choose from 6,500 global stocks, ETFs, mutual funds, and more, and manage your account through the Freetrade app alongside an ISA and GIA.
With one low flat fee, getting a Freetrade Plus plan and opening a SIPP could allow you to keep more of your pension pot as it grows.
Is your pension underperforming - FAQs
Why is my pension dropping in value?
There are several reasons your pension pot could be dropping in value. These include:
- Market movements
- Rising interest rates impacting bond prices
- High fees
- Poor investment performance
Depending on the time frame, a drop in pension value is not necessarily a cause for alarm. If you are still a long way from your retirement date, your pension is likely to be more heavily invested in stocks. These can fluctuate significantly in value, so you may see your pension pot take a dip over short periods.
However, sustained losses over the medium to long term are more concerning.
Can I find my pension using my NI number?
Yes, your National Insurance number can help you to find your pension. Services like the government’s Pension Tracing Service can find historic pension pots linked to your National Insurance number, reuniting you with lost or forgotten pots.
How much is the full state pension?
The full New State Pension for 2025/26 amounts to £230.25 per week. The New State Pension is for men born on or after 6 April 1951 and women born on or after 6 April 1953.
The state pension changes each tax year by whichever is highest out of average earnings growth, Consumer Price Index (CPI) inflation, or 2.5%. This is known as the “Triple Lock” system.
Your eligibility for the state pension depends on your record of National Insurance contributions. You need 10 qualifying years of contributions to be eligible for any state pension, and 35 years to qualify for the full state pension.
Sources
The value of your investments can go down as well as up and you may get back less than you invest.
SIPP rules apply. Tax treatment depends on your personal circumstances and current rules may change.
A SIPP is a pension designed for people who want to make their own investment decisions. You can normally only access your money from age 55 (57 from 2028).
Freetrade currently only supports Uncrystallised Fund Pension Lump Sums (UFPLS) for SIPP withdrawals.
Seek professional advice if you need help with your pension.
Before transferring, check for any exit fees or loss of benefits from your current provider.
Pensions transferred to Freetrade may lose any protected pension age benefit, meaning you may not be able to draw the money until age 57.
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