Around four million workers under 40 could be losing out on investment returns as they are in low-risk pensions that do not have potential for higher growth, according to research from Interactive Investor (II).

The research, undertaken by Opinium, revealed that 66 per cent of people aged between 18 and 39, equal to around 10 million people, have a low-risk (25 per cent) or medium-risk (41 per cent) pension, whilst 19 per cent have a high-risk pension.

Furthermore, over half (54 per cent) of workers under the age of 40 think that a medium-risk pension will produce the strongest returns for their pension, despite evidence that higher risk portfolios with a greater proportion of exposure to equities are more likely to deliver higher growth over the long term.

Nearly four in 10 (39 per cent) of under-40s also viewed medium risk as the most appropriate risk level for their pension, while 28 per cent viewed low risk as the most appropriate, and just 20 per cent viewed a higher risk as most appropriate for their age.

Indeed, II suggested that the risk profile of younger workers’ pension investments reflects their risk appetite rather than how many years to retirement they have left, concluding that young workers do not have a high risk appetite for their pension investment, as only 16 per cent described their risk appetite as high, while 41 per cent described it as medium and 33 per cent said their risk appetite was low.

Read more @Pension Age