Just over half (53 per cent) of UK savers would prefer their pension money be invested in the UK, research from the Pensions and Lifetime Savings Association (PLSA) has revealed.

The research showed that 37 per cent of pension savers would prefer to have UK investments if they generate comparable returns, while a further 16 per cent would prioritise UK investments even if they provided lower returns.

The PLSA highlighted this as further evidence of the principle that UK investment should be pursued when it directly benefits savers and their future retirement income.

Similar attitudes were seen in relation to climate change, as 70 per cent of savers said that they were worried about its impact, but less than a fifth (19 per cent) of defined contribution (DC) savers would definitely accept lower returns for greener investments.

A further 50 per cent said they might consider lower returns, but only if the impact was significant, while 31 per cent said they prioritise financial returns.

However, despite the focus on investments, the PLSA found that 63 per cent of savers do not know whether their pensions are invested in UK businesses or infrastructure projects.

In addition to this, just over a tenth (13 per cent) are certain that their pension includes UK investments, and 24 per cent believe it does but are unsure.

The PLSA found that many savers still lack knowledge about their investments more broadly too, as while 74 per cent were aware that pension schemes invest their money, less than a quarter (23 per cent) of DC savers and 25 per cent of DB savers knew where their pensions were invested.

In addition to this, just over a third (37 per cent) of DC savers believe they have the skills and knowledge to choose their pension investments, while a similar proportion (37 per cent) say they do not.

To address this, the PLSA argued that pension providers and the government must improve financial literacy, ensuring savers understand their investment options and can make informed decisions.

PLSA director of policy and advocacy, Zoe Alexander, said; "It’s striking that UK investments are proving to be a preference for many savers. Pension schemes are already thinking hard about how to invest more in the UK in ways that will deliver strong returns.

“The government has a key role to play in creating the right conditions, helping to deliver the right UK growth assets for schemes to invest in, at the right price.

"And employers need to be encouraged to choose schemes for their employees that are delivering the best value overall, rather than just looking at the headline price, because the type of UK investments schemes are looking at can be more expensive, albeit with the potential to deliver strong returns.

“By working together, the government and the industry can ensure pensions drive both strong financial futures for savers and sustainable growth for the UK economy.”

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