2016 saw highest pension fund returns since 2009 | moneyfacts.co.uk

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Published: 24/01/2017

2016 may have been turbulent, but it seems that this turbulence paid off for retirement savers, with data from the upcoming Moneyfacts Personal Pension and Annuity Trends Treasury Report revealing that pension funds enjoyed their highest returns since 2009.

Strong growth

The data shows that, despite considerable economic and political uncertainty throughout the year, the average pension fund finished 2016 up by 15.7%. This marks the fifth consecutive year of positive pension fund growth, and will be welcome news not only to those saving into a defined contribution pension scheme – the default workplace pension – but also the growing number of retirees who remain invested in pension funds by opting for income drawdown.

Of all the pension funds surveyed, the vast majority (94%) delivered positive growth during 2016, which helped ensure such strong returns across the sector. Indeed, as the table below shows, 2016 saw the strongest returns since 2009 (when average pension fund growth hit 22.30%), and recent years have been a welcome turnaround from 2011 when returns saw a worrying drop.

Table 1: Average annual pension fund returns (Source: Moneyfacts/Lipper)

Calendar year Pension fund growth
2016 15.70%
2015 2.60%
2014 5.80%
2013 13.90%
2012 10.80%
2011 -4.60%
2010 13.80%
2009 22.30%
"Defined contribution pension schemes and income drawdown are in the spotlight like never before," said Richard Eagling, head of Pensions and Investments at Moneyfacts. "The record numbers saving into defined contribution pension schemes and using income drawdown have placed even greater importance on the ability of funds to deliver strong performance if individuals are to have any chance of generating a reasonable retirement income.

"For all the economic and political uncertainty that 2016 brought, it will be remembered as a productive year for the performance of most pension and drawdown funds."


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