Recent research reveals that the majority of UK lifestyle pension funds have faild to keep pace with inflation, eroding retirees’ purchasing power. The study, commissioned by Mail and This is Money and analysed by data firm Corporate Adviser Intelligence, examined the 18 largest such funds over the past five years.

Only 2 of 18 largest lifestyle funds beat inflation

Corporate Adviser Intelligence found that just two of the 18 biggest lifestyle pension schemes managed to outstrip the Retail Price Index (RPI) between 2019 and 2024. This stark figure underscores a systemic shortfall in a product marketed as a low‑risk, retirement‑ready solution.

Average 5.0% return versus 6.7% RPI

For savers approaching retirement, the average annualised return acrooss the 18 funds was 5.0 per cent, while inflation measured by the RPI ran at 6.7 per cent over the same period. As a result , the real value of contributions declined each year, a fact that many participants may not notice until they are already retired.

Corporate Adviser Intelligence study reveals hidden loss

The analysis, cited by Mail and This is Money,highlights that the loss is often invisible because lifestyle funds automatically shift assets toward lower‑risk bonds as members age. this glide‑path effect reduces volatility but also curtails growth, leaving the portfolio vulnerable when price rises outstrip modest returns.

Potential long‑term loss for near‑retirees

Financial advisers warn that a five‑year lag behind inflation can translate into a substantial shortfall in retirement income. for a member with a £200,000 pension pot,a 1.7 per cent annual real‑term loss compounds to roughly £18,000 less purchasing power after a decade.

Will regulators tighten oversight?

There is currently no clear regulatory mandate requiring lifestyle funds to meet inflation‑linked benchmarks. The Financial Conduct Authority has previously urged providers to improve transparency, but the new data may prompt a reassessment of whether existing rules adequately protect savers.

Open question: Can fund managers adjust glide‑paths?

One specific uncertainty is whether providers will redesign their asset‑allocation models to incorporate inflation‑linked assets without sacrificing the low‑risk profile promised to older members. As of now, the study does not indicate any imminent changes, leaving the question of future fund performance unresolved.