People who stay in default pension funds are losing 4.75 per cent in returns every year, according to research from Hargreaves Lansdown.
Data from a survey of 58,000 workplace pension members show 47 per cent of people with a pension above £25,000 choose their investments.
Comparatively, just 5 per cent of people with a pension pot under £5,000 are actively choosing funds.
Hargreaves Lansdown senior pension analyst Nathan Long says because default pensions funds are mostly conservatively managed, returns will lag.
He says: “Many people don’t think of themselves as investors but as soon as you are put into a workplace pension, that is exactly what you become.”
Nearly a quarter (22 per cent) of scheme members choose their own investments, with people in their 40s most likely to do this.
Long says: “People tend to choose their investments after their pot has built up a little or they have been a scheme member for a number of years but you don’t have to wait. After all, it’s your money and the choices you make can massively boost your retirement prospects.”
The platform giant says £60,000 can be added to a pension pot by retirement by increasing investment returns by 1 per cent each year.
Hargreaves figures show the likelihood of choosing funds also increases with average pot size. Around 35 per cent of investors with a pot between £25,000 and £50,000 are actively selecting, while more than 70 per cent of those with a pot of £250,000 and over choose their own funds.
More than 40 per cent of investors of any age who actively choose where their pension is invested consult online information, as well as meeting a “financial professional” face-to-face.