Hidden charges costing savers up to £18,000

British savers could be losing us much as £18,000 in hidden pension charges, with 55 per cent currently in ‘expensive pensions’ where charges are greater than 1 per cent.

Profile Pensions' research revealed that, on average, people are paying three times more than they should for their pension, with 62 per cent of UK savers stating that they don't know they’re paying annual pension charges.

It emphasised that the varying pension charges can make it hard for savers to understand what their paying for, and where their money is going.

The analysis also revealed that a further 31 per cent of savers are in an ‘okay’ pension (with a charge between 0.5-1 per cent) and only 14 per cent are in ‘cheap’ pension plans, with a charge of less than 0.5 per cent.

Although the average annual provider charge on pensions is at 1.09 per cent, Profile Pensions has recommended that these charges shouldn’t exceed 0.34 per cent.

Profile Pensions chief investment officer, Michelle Gribbin, commented: “Many aren’t aware that they even pay fees, let alone how much money they could be losing each year.

“Through our own research and data, we hope to raise awareness on the issue of pension charges and encourage people to take action to check their charges. Most people should be paying much less, ultimately costing themselves thousands of pounds over a number of years which could easily be avoided.”

The research also stipulated that women are 19 per cent more likely than men to be in a “rip-off pension”, where charges exceed 1.5 per cent.

Furthermore, over half of women (52 per cent) were unsure of where to go to confirm their charges, which the firm says makes it less likely for them to take action and lower costs.

Those with smaller pension pots were also identified as being more likely to be overcharged, as fix-rate charges can lead to a higher percentage in pension charges.

Gribbin added: “Our data identifies a specific group of pension savers who’re particularly vulnerable to be paying very high fees, so it’s important these people act quickly to check if they’re being overcharged and take measures to reduce charges.”

Concerns around hidden pension charges were also recently raised by Royal London, who argued that costs and charges should be openly included within the potential simpler benefits statement structure.

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