Personal PensionDec 18 2014

Retirement savers aiming for 7% return

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Retirement savers are striving to achieve annual returns of 7 per cent on long-term investments, research from Key Retirement shows.

Key Retirement’s nationwide study among over-45s found the average return they want from long-term investments is 7 per cent, with nearly one in five aspiring to achieve returns of more than 10 per cent on their funds.

The online survey of 3,052 UK non-retired adults showed expectations do not fall markedly the older savers become as the over-65s are targeting average returns of 6.7 per cent while those age 60 to 64-years-old strive for 6.8 per cent.

Dean Mirfin, group director at Key Retirement, said the views on investment returns highlight the need for expert advice and guidance on retirement options ahead of the launch of pension flexibility in April 2015.

He said: “Recent experience shows that achieving annual returns of seven per cent on long-term investments can be challenging unless savers are willing to take a very long-term view or accept high levels of risk.

“People converting their retirement funds to income cannot afford to wait up to 10, 20 or 30 years for a long-term return and also may not be willing to accept high levels of risk which could leave them open to taking out schemes they do not fully understand. Many do not appreciate that rates of return can be erratic and can also fall into negative returns some years.

“It underlines the need for expert advice on what is realistic now and in the future so that retirement savers can make the best of the genuine opportunities from pension flexibility, in a way that delivers true expectations.”

emma.hughes@ft.com