Millions of pension pots could be at risk (Image: Getty)
Millions of pension savers in the UK could be at risk of losing tens of thousands of pounds as a result of the
An investigation by the Telegraph has found that people’s savings may be at risk if their pension provider has moved their pots to poor investments.
The report added that a typical pensioner could be £90,000 worse off, adding that one saver lost a third of his £330,000 retirement fund.
amid the threat of trading tariffs from US President-elect , meaning many pension savers with lifestyle funds (funds that automatically adjusts your investments based on your needs and the date you choose for retirement) could be at risk again.
Government bonds, also known as gilts, have been seen as one of the safest ways to invest your savings, especially during the period of low . But, in recent years, have jumped up and inflicted heavy losses on pension savings.
Experts are warning that this risk is especially pertinent for those close to retirement age.
:
As the, the rise of bond yields may also be down to the UK economy underperforming. Chancellor Rachel Reeves has come under fire for failing to get the economy going since Labour took office in July.
Bond yields have been rising since August, inflation is at its highest in eight months and the economy has shrunk for two months in a row.
Charles Stanley, an investment management firm, says a saver who had a pot worth £150,000 five years ago would now have £210,000 if 80% of their pension was still invested in shares.
But if these funds had been placed into bonds, they would only have £120,000. This represents a £90,000 difference. A bond is a loan from an investor to a borrower, where the borrower pays interest to the investor.
This hit those who had placed their pension pots in a default fund. Default funds use a strategy of shifting savings into bonds because they are seen as low risk investments.
A number of experts have warned that lifestle funds are no longer a suitable way to invest pension pots.
Don’t miss… [REPORT] [REVEALED]
Yields on Government bonds have have risen in recent years (Image: Getty)
Former pensions minister Baroness Ros Altmann told the Telegraph: “It has been a massive disappointment to me that pension companies have simply failed to rise to the challenge of developing new products.”
Experts have also urged regulators to review lifestyle funds and promote new alternatives for those looking to invest their savings.
A government spokesman told the Telegraph: “Pension scheme trustees have a duty to act in the best interests of their members, and the Government requires them to provide information about the investments chosen on their behalf.
“There should be no doubt of this Government’s commitment to economic stability and sound public finances.
“We are meeting our fiscal rules – both the stability and investment rules are met two years early, and from this point we are only borrowing for investment and net financial debt falls.”