Brits have been warned that overlooking pension fees could cost them thousands of pounds in the long run. Most pension providers charge fees to cover the cost of managing money, running accounts, and investing funds, but investment service Moneyfarm has encouraged savers to check these charges.
Chris Rudden, head of investment consultants at Moneyfarm, stressed that while small differences in charges are easily overlooked, they can make a real dent in returns over time in excess of £2,500. If money is invested across several providers, savers could be paying multiple sets of fees without realising it.
How Fees Add Up
To see how quickly fees can add up, consider a £20,000 pot invested in an ISA or pension for 10 years, growing by an illustrative 5% a year before fees. At a 0.6% annual charge, this money would grow to around £30,800. But at a 1.5% charge, it would only reach around £28,200. This seemingly minimal gap of just 0.9% per year would result in a difference in savings of around £2,600.
Mr Rudden said: "Some of the scariest financial mistakes are the ones that can stay unnoticed for years. A forgotten pension, an unnecessary fee, or cash that has been sitting idle for too long, may not feel particularly frightening in isolation, but over the long term these small oversights can make a real difference to your financial future."
Checking Your Finances
He added: "The good news is that getting your finances in order doesn't need to be scary. A few simple checks can help you understand where your money is, what you're paying and whether your savings and investments are still working towards your goals."
He also encouraged Brits to seek out their forgotten pensions. According to the Pensions Policy Institute, more than 3 million UK pension pots are currently lost, worth around £18.7 billion.
Tracing Lost Pensions
Lost workplace, personal, or third-party pensions can be traced for free using the UK government's Pension Tracing Service.
