Fewer than half of UK adults with a pension say they ‘care’ about the charges they pay on their pensions *
Research from Yougov has revealed fewer than half of UK adults with a pension (48%) say they ‘care’ about the charges they pay on their pensions, compared to seven in ten who pay close attention to what they pay for a mortgage (71%) or current bank account (70%).
The poll of 1,618 UK adults with a pension found that, of those who say they don’t care about what charges they pay on their pension, almost one in five (18%) haven’t got round to looking into or thinking about what they are paying, 16% think they don’t have enough currently saved for charges to make a difference and 14% say they don’t believe charges will make a difference to their pension savings when they come to retire, despite there being clear evidence that higher charges can negatively impact somebody’s retirement savings over the long term.
Meanwhile, a further 14 per cent say they trust that their pension companies’ charges are reasonable, just over one in 10 say that pension charges are too complex to understand (11%) and 10 per cent that it’s too difficult to find out what charges they pay.
Why charges are important?
Charges aren’t always easy to establish for your pensions or investments, but we regard charges as one of the main factors you can influence to improve your returns. For example, a client with a £250,000 investment fund, paying an extra 0.5% per year in charges, over a 25-year period, could be over £75,000 worse off assuming investment returns are the same**. While not the only factor that should be taken into account, it is extremely important to ensure your plan charges represent good value.
We regularly help our clients review their existing pensions, to make sure they are cost effective and continue to meet their needs.
* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2104 adults. Fieldwork was undertaken between 7th – 10th January 2022. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
**Assuming a 4% return versus a 3.5% compound return net of charges over 25 years would result in a fund value of £666,459 versus £590,811. Please note that a future performance indicator is not a reliable indicator of future results.
The value of investments (including property) and the income derived from them may go down as well as up.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.