A proposed Government clampdown on pension fund exit fees would be great for savers wanting to get at their money after 55.
But what millions may not realise is that their retirement nest egg is already being raided year after year by charges many know nothing
about.And they bite into funds so deep they overshadow news of a planned 1% exit fee cap on the value of a pot.
These charges are made by pension providers from the day you take out a plan and throughout the years you save – and they could leave you tens of thousands of pounds worse off.
Basically, providers charge you for the pleasure of administering your hard-earned savings pot – and then they stick another one on for managing the investments that help it grow.
Some pension firms combine these into a single charge.
Simon Vella, chief marketing officer at pension comparison firm Profile Financial , reveals that, in some older plans, these charges could add up to as much as 2.9% a year, with the average deduction being 1.5%.
Yet new pension plans can be set up with charges as little as 0.64% – so it could be well worth considering a switch of provider.
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