Pension funds could be headed for another year of strong returns in 2025, according to predictions from investment banks including JP Morgan, Morgan Stanley and Bank of America, garnered by Pensions Bee.
The managers expect the bull run in US stocks to continue, while other global markets should be supported by an environment of moderate growth, disinflation and monetary easing, the pensions provider says. Risks on the horizon include geopolitical challenges and uncertainties around the change of leadership in the US, which could usher in policy changes or trade tariffs with far-reaching impact.
This could means that pension savers find their retirement pot is boosted by another year of strong investment returns, provided they are exposed to the right markets, the provider added.
Annabelle Williams, spokesperson for PensionBee, said: “Often people don’t think of their pension as an investment, instead seeing it as a cash savings pot. That means people tend to under-appreciate the importance of investment returns and the magic of compounding on boosting their overall retirement fund. But if you have a pension, you are an investor and where your money is invested matters to your retirement outcome.
“Too often the news brings cause for concern, but there are bright spots in the outlook for investment markets next year. Of course, it’s not a given that anything will unfold as predicted, but it’s worth hearing that professional investors see pockets of opportunity and have reason to think that the recent bull run in the US may continue.”
Savers may be underestimating the potential growth of their pensions. PensionBee’s Pension Performance Benchmark analysis which tracks the returns of leading pension providers found that the average annual growth over five years was close to 8% for those 30 years from retirement, whereas savers anticipated returns of 5-7%.
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