The People's Pension has found that more than £1.2Billion in charges have been dished out to pensioners
Pensioners are being alerted to a potential £2,000 charge that could be draining their retirement funds. Research conducted by The People's Pension has revealed that over £1.2 billion in charges have been imposed on pensioners who unknowingly transferred their pension pot to a scheme with higher fees.
All pension schemes levy an annual management fee to cover the costs of administering the pension itself, and many people seek to switch to platforms or providers with lower fees. However, millions are inadvertently doing the opposite, transferring their workplace pension fund to a provider with higher costs than before, reports the Express.
The research discovered that many savers opt to consolidate several low-cost workplace pensions into a single, more expensive option, possibly for the convenience of having them all in one place, without realising they are diminishing their own savings. Higher cost options could lead to a loss of up to 20 percent of their pension by the time they reach retirement age.Most pensions charge between 0.25 and 1 percent per annum to manage a pension.
For instance, if your pension had £50,000 in it, a 1 per cent charge would cost £500, and over five years, that would amount to £2,500 paid out just in fees. However, with a 0.25 percent rate, you'd only shell out £125 in fees annually, or £500 over a five-year span, leaving you £2,000 richer. Conversely, if you transferred your pension from a 0.25 percent provider to a 1 percent one, you'd find yourself £2,000 poorer.
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