Pensioners losing 10% of retirement savings through charges

Pensioners could be losing up to 10% of their pension pot due to charges levied by providers, according to research by Citizens Advice.

The charity found that 7 in 10 people are not shopping around for different products when accessing their pots.

24% of people who remain with their pension provider did so thinking they had the best value possible while 15% remain to avoid being hit by exit charges.

The report also found:

  • people buying annuities are more likely to shop around with 57% checking products with other providers
  • 39% bought a drawdown product while 14% of those took cash.

The research shows that around 160,000 people have paid to access their pensions since the reforms were introduced in April 2015.

Pensioners with savings of £20,000 or less who have faced charges are paying on average £1,966 - leading to loses up to 10% of their retirement savings.

Gillian Guy, chief executive of Citizens Advice is calling for a standard £50 charge to cover provider’s administration costs:

“The threat of excessive charges can also put people off making the right pension choices for them. A standard £50 exit fee across all types of pensions will mean consumers can make the most of the pension freedoms.”

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