Advisers have slammed a study claiming that UK pension savers are being hit by huge charges compared with their European counterparts, suggesting the comparisons are misleading.
Hermes Fund Management founder and special adviser David Pitt-Watson says high charges mean UK savers are retiring with pension pots worth half as much as they would get elsewhere in Europe despite investing the same amount .
In the study, he compares a 1.5 per cent annual charge in the UK with 0.04 per cent levied by a big Danish pension fund.
But Hargreaves Lansdown claims the research is “disingenuous” because it compares the private pensions sector in the UK, which is geared towards active management, with tracker funds in Denmark.
Head of financial practitioners Danny Cox says: “You can only run funds for 0.04 per cent if you are using a straightforward tracker but most UK investors choose actively managed funds. Pitt-Watson is comparing charges for active management to fees for institutional corporate pensions with massive volumes.
“He has also been selective with the products they choose to compare. I think it is a disingenuous argument.”
Informed Choice managing director Martin Bamford says the comparison is “misleading” and fails to present a viable alternative to the current system.
He says: “I understand why he is flagging this up but he needs to present a genuine alternative. It would be great to get to a situation where we can access funds at 0.04 per cent but that is not where we are at in the UK. That amount usually excludes the platform and advice costs anyway.”
An Association of British Insurers spokeswoman says: “We dispute Pitt-Watson’s calculations being based on 1.5 per cent because personal pensions are typically no more than 1 per cent and that includes advice and fund management and many group personal pensions are even lower.”