What pension charges am I paying?

Knowing what you are paying in charges on your pension is vital as these costs could make a huge difference to the value of your pension fund at retirement.

However, this is easier said than done as many people find it difficult to work out and understand exactly what charges they are paying. The pension providers do not help here either, as the statements that are sent out can be confusing and, in many cases, they do not even need to state the charges that are being deducted from your plans.

Frozen pension?

I hear this a lot – the term “frozen” would lead you to believe that nothing is happening to your money – this could not be further from the truth! Even though you may not be contributing, the charges will continue to be collected from the fund.

So, what charges could be being deducted from your pension?

You could be paying some or all of the following charges

  • Annual management charges
  • Fund management charges
  • Platform or account charges
  • Monthly policy or service fees
  • Fees for buying or selling investments
  • Contribution charges (sometimes called bid/offer spread)
  • Transfer or exit charges
  • Inactivity fee
  • Fees to convert to drawdown

The effect of these charges on your pension fund at retirement could be devasting!

The good news, is that charges on pensions have reduced significantly in recent years, however providers do not have to apply their new charges retrospectively to old legacy plans.

Therefore, it is important you review your old pensions and check you are not paying more than you need to be.

How to I find out what I am paying?

Check your annual statements and if you are still unclear contact your pension provider and ask for a full breakdown of the charges that you are paying. You could also engage the services of a pensions adviser to help and advise on your options.

If you do find out that you are paying too much you could consider moving the funds into a lower costed pension. This could be an existing pension plan that you already have or you could set up a new pension.

I have produced a short guide on should you consolidate your pensions HERE.

Professional Help

You might also want to seek professional financial advice to ensure you’re making the right decision, and not losing any valuable pension benefits in the process.

Why not take advantage of our Free Pension Review Service where we will undertake this work for you.

You can book an initial meeting to discuss your requirements with no obligation HERE

We are passionate about helping our clients live their best life with the money that have available.

 

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