Shock report reveals loyal pension clients could be hit with huge pension fees leaving them £13,500 out of pocket when they try to access their money, and below, two things you can do about it now.
Many People Could Run Out Of Cash Earlier Than Expected As Hefty Pension Fees Take Their Toll
Could Your Pension Fees Eliminate Your Fund Growth?
This isn’t new news.
It’s been going on for years.
We wrote an article about it more than a year ago entitled Citizens Advice Unearths Shocking Pension Practice.
Now, a detailed review of pension fees lifts the lid on many of the UK’s largest asset managers and fund providers.
It concludes that people who fail to shop around could be losing thousands of pounds from their pension funds as a result of inflated pension fees.
Since the dawn of time, and reinforced by many surveys, the majority of people simply fail to compare pension fees, either while they are building their pension funds, or once they draw their benefits. As a result, they’re unaware their pension fees could be much higher than necessary.
It could be argued that some of Britain’s biggest providers exploit this fact to impose what can be penal levels of pension fees. Campaigners who are aware of this issue fear this might become the next pension scandal, and as a result, they’re calling for Government action.
It’s well worth reading the report on pension fees, to get to grips with how the difference between the costs imposed by pension providers can vary by more than £10,000!
Responding to the findings, pensions expert Billy Burrows, of the retirement specialist Better Retirement, said:
These figures highlight the crucial importance of shopping around for the best deal you can find and not taking the first thing you are offered. The difference in charges may not look big, but over time can eat away at your pot.
In another, more punchy, take on the issue of pension fees, Finalytiq director Abraham Okusayna said:
I quickly learned very little of the industry is based on evidence of what is likely to deliver the best outcome for consumers. Much is driven by vested interests of providers who simply what to flog stuff, even if it hurts clients in a big way.
So I started Finalytiq to cut through all that. When you look at the deluge of academic evidence available on investing and retirement, for instance, the industry is often doing the exact opposite of what is most likely to deliver the best outcome for people.
You can read Abraham’s thoughts on pension fees here.
Two Things You Could Do About Your Pension Fees
Assuming your pension provider has your best interest at heart is proven to be flawed.
Whether you’ve been with them for decades, or just for a short period, you really must do one of the following:
1. Shop Around To Find The Lowest Pension Fees
It might involve you with a few days research, but if the result of your investigations is a reduction in pension fees of £13,500, as suggested in the above article, that’s a pretty impressive return on your time spent.
2. Get An Pension Fees Expert To Shop Around For You
It might cost you a few hundred pounds or more with an independent financial adviser, but with their access to research tools, they should be able to come up with the best deal for you in relatively short time.
What’s more, an analysis of your requirements could help you invest your pension money in the right assets to meet your needs, which according to the Financial Conduct Authority, could be worth around £40,000 more to you.
That’s money very well spent, I’d say!
If you’d like an introduction to our recommended pension specialist, please complete our contact form.
The Trillion Dollar Club
Only one of the top 15 asset holders in the world comes from the UK.
Legal & General.
The majority are dominated by US-based managers.
Interestingly, many of the companies with at least one trillion dollars under management offer very low cost index trackers, which help to keep pension fees and other investment fees to a minimum.
It demonstrates, in no small way, that ripping clients off with unnecessarily high pension fees isn’t the only way to build a profitable business!
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