Pension saving is vital for many Britons who are looking to plan for a comfortable retirement, and saving often takes place years in advance to build up a significant pot. However, new research has found pension savers could stand to make a saving of thousands of pounds through just one action. Switching pension drawdown provider could allow Britons to save up to £12,300 over their retirement.
However, sticking with more expensive products could leave savers with significantly less in their final fund after 20 years.
Which? research estimated this to be £154,000 with Aegon, when compared to £165,300 at Interactive Investor and Halifax Share Dealings.
It is worth noting, though, that Aegon remained competitive for those with pots over £250,000, as the company does not charge at all on funds over this sum.
But for those with a much higher sum of £500,000 at retirement, the chasm widens.
Which? found that an Interactive Investor customer would pay charges of £62,700 after two decades in retirement, compared to £83,300 with Hargreaves Lansdown.
Commenting on their charges, Hargreaves Lansdown said: “Our fees are tiered and the average levied falls as clients’ pensions rise and meet various valuation milestones.
“Our pricing is very simple, transparent and great value for the services offered. Charging as a percentage encourages people to invest for the first time and build their pension pots.”
Aegon commented that their terms were often negotiated with advisers and customers, and that the majority of their customers paid less.
Charging structures can greatly vary, and it is therefore important to undertake analysis.
Impartial, whole market pension advisors are often seen as the solution to analysing a person’s pension portfolio and determining the best option for them.
In the same vein, the analysis revealed that it was often intricate charges which confused savers, and made it more difficult to discover the best deal.
Many are left unsure as to what the correct choice for their circumstances is, or how they can accurately compare costs between companies.
Charging structures can vary from provider to provider, and there is often little consistency in the way these charges are presented to customers.
As a result, the consumer magazine has called for more clarity and transparency on pension charges.
Jenny Ross, Which? Money Editor said: “Some of the charges cannot be avoided, but other providers may offer the same investments at a lower cost, and savers are free to switch providers at any time.”
Ms Ross urged the regulator to introduce a cap on pension drawdown charges and transparency concerning fees.
Many drawdown customers choose to stay with their existing provider when taking money from their retirement savings.
This is, despite the fact that savers are free to switch companies at any point.
The Pension Advisory Service provides further information for Britons who are looking to navigate pension charges, and directs savers towards more in-depth advice.
Published at Wed, 17 Jun 2020 23:05:00 +0000