The average earner could see their potential pension income cut by almost a quarter (24%) due to high pension charges and poor annuity decisions, an National Association of Pension Funds (NAPF) report has revealed.

Research conducted for the NAPF by the Pensions Policy Institute (PPI) analysed how savers' decisions could affect the pension of an average earner due to retire in 2055 at the age of 68. It highlighted that many earners will have to continue working into their early 70s in order boost income as a result of this cut in income.

Concerning annuities, the report found that the lowest rate conversion of a pension pot quoted on open market tables rather than the ‘best buy’ option could result in pension incomes being reduced by 12 per cent. The report found that around a third of people are not ‘shopping around’ to find the best available rates.

Furthermore, it found that if an employer negotiated a stakeholder pension at the long-term rate of 0.3 per cent, a saver can expect to boost retirement income by 17 per cent as opposed to those experiencing higher charges.

NAPF chief executive Joanne Segars said: “People are not powerless when it comes to their pension. By making the right moves they can get a lot more for their money without having to pay any more in. High charges can eat away at a savings pot and both workers and employers should try to keep them down.

“People who don’t get the best out of their pension could end up stuck at work for years longer than they planned. Getting a good deal on charges and annuities can mean the difference between enjoying retirement and spending years more at the desk.”

The report details how the NAPF is actively working in close unison with employer bodies and groups to make pension charges more transparent, as it found that an average earner could triple their annual retirement income of £2,200 to £7,710 through an efficient series of pension investment choices.

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