The average total charge paid by members after transferring out of defined benefit (DB) pension schemes has fallen by 0.2 per cent per annum over the last four years, a survey from XPS Pensions Group has found, although concerns around value for money remain.

XPS’s annual Member Outcomes Survey, which analysed over £3.5bn in pension transfers, covering over 13,000 transactions over the last five years, found that transferred members’ total charge fell from around 1.9 per cent per annum in their first survey in 2018 to around 1.7 per cent per annum in the most recent survey.

According to the group, this could lead an average member’s fund to last one year longer.

XPS detailed that this fall had been driven by provider charge and ongoing financial advice charges, as both had experienced a 0.1 per cent fall from 2018 to 2022 (0.4 per cent to 0.3 per cent, and 0.7 per cent 0.6 per cent respectively) whilst investment charge remained constant at 0.8 per cent.

Despite the fall in fees, XPS Pensions said that they remain concerned many members are not getting value for money from the “significant" charges they are paying, “effectively not using or valuing the services that they are paying for”.

Indeed, XPS suggested that access to better support and advice could help those who transfer from defined benefit (DB) schemes receive up to 15 per cent more in income per annum, or make their funds last a further eight years.

The pensions group detailed that, where schemes offer at-the-point-of-access support – such as help with obtaining quality financial advice and signposting to low-cost products – transferring members were able to generate more out of their savings.

It was also discovered that a greater number of schemes are taking action to help members, with 64 per cent of members covered by the survey now having enhanced support or an increased range of options, up from 50 per cent in 2021.

XPS head of member options, Mark Barlow, commented: “Members whose transfer value is less than £30,000 are those who will benefit most from the provision of at retirement support, as they are less likely to seek out financial advice on their own making them most vulnerable to poor decision making but also at greater risk of falling victim to a scam.

“Ensuring members’ finances are in good health at retirement starts with good advice and support.

“In the midst of the cost-of-living crisis, schemes should be doing what they can to help members make good decisions about their finances and, with around one million members expected to retire or transfer over the next five years, now really is the time to act.”

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