Only 20% of workers under the age of 40 think that a higher risk pension was the most appropriate level for their age, according to research by Opinium on behalf of flat fee pension platform Interactive Investor.

Four in ten (39%) under 40s said the most appropriate risk level for their pension is medium, with 28% saying that low risk is the most appropriate risk level.

Two thirds (66%) of those surveyed aged between 18 and 39 (representative of around 10m people) said they have a low risk (25%) or medium risk (41%) pension, while only 19% said their pension is high risk.

The risk profile of younger workers’ pension investments appeared to reflect their risk appetite rather than how many years to retirement they have left: with the research showing that young workers do not have a high risk appetite when it comes to where their pension is invested. Only 16% described their risk appetite as high, 41% described it as medium and 33% said their risk appetite was low.

A recent report from actuarial consultancy LCP suggested younger workers would either have to increase their contributions or take other actions, such as increasing the risk level of their pension, to boost their chances of retiring with a decent retirement pot.

However, when it came to expectations for returns, the new research from Opinium found the average expected real annual return from a pension among workers under 40 is 4.6%, almost double the 2.4% weighted average rate of return calculated by LCP for a typical pension implied by FCA assumptions on future growth rates for different assets.

Men were more likely than women to say they have a higher appetite for risk when it comes to pensions and other investments, with 24% of men under 40 describing their risk appetite as high compared to 9% of women.

Men were also much more likely to say they currently have a higher risk pension than women, with 27% of men compared with 10% of women under 40 saying they have a higher risk pension.

Nearly half (49%) of men said they have a medium appetite for risk compared with 33% of women, while 43% of women said their risk appetite was low, compared with 23% of men.

Risk appetite was generally higher among workers in their twenties, with 20% saying they have a high risk appetite compared to 13% of 30 to 39-year olds, suggesting that understanding may be better among younger workers who have started working life under auto-enrolment.

Opinium conducted research between 21 June and 25 June 2021 and interviewed 2,000 UK adults aged 18 to 39.