Nearly eight out of ten professional investors believe that the majority of pension funds will fail to reach their long-term investment targets given increased longevity, a study suggests.

The result came from a survey conducted by active investment manager GAM.

Regulation is seen as a key barrier to generating sufficient returns and satisfying liabilities, with 64% of respondents agreeing that regulation needs to change to allow retirement schemes more flexibility in their asset allocation decisions.

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Half of respondents anticipated that they will increase their allocation to active products over the next three years, with only 13% planning to increase their investment in passive products.

Some 38% planned to increase portfolio allocations to alternative investments during the second half of 2015, 35% to European equities and 27% to emerging market equities.

Geopolitical risk, failure in the economic recovery and interest rate movements are perceived as the main risks for investors. However, only 34% of respondents expect a Greek exit from the Eurozone in the next 12 months, and even fewer, just 9%, believe that Great Britain will exit the EU under the new government.

Alexander Friedman, group chief executive, said: “It is clear that politics and possible policy errors remain a key near-term risk for markets, however economic fundamentals should support the on-going recovery.

“The investment backdrop has changed dramatically in recent years as monetary policy has begun to diverge and we believe that the markets have reached an inflection point; the indiscriminate market rally in risk assets is coming to an end and investors have to take a truly active approach to identify the sources of alpha for the coming years.

“Investors are rightfully concerned about how retirement liabilities will be met and believe that a flexible investment approach is required to remedy this.”