Pension providers’ high annual fees and charges have been revealed through research that shows some providers’ exit fees amount to more than 70 per cent of the pension pot.
Pension consolidator PensionBee tracked 1,800 pension transfers from 20 providers, looking at costs, exit fees and transfer times.
The highest exit fees, calculated as a percentage of the pension pot, were from Friends Life at 77.6 per cent, Phoenix Life at 73.65 per cent, Abbey Life at 48.72 per cent and ReAssure at 15.14 per cent.
Now: Pensions was singled out in the research as charging high annual fees to some customers. PensionBee found that the average fee of the 173 investigated Now: Pensions customers is 10.4 per cent.
PensionBee explains this is because Now: Pensions charges 0.3 per cent of the pension as well as administrative fees of up to £18 pounds per year, as auto-enroled staff build up small pots when they change jobs.
The research found Nest can charge up to 1.9 per cent of an active workplace pension.
PensionBee also looked at annual average fees and exit charges if customers want to switch between providers. Phoenix Life came out most expensive with an average pension fee of 1.43 per cent, closely followed by Abbey Life which had an average fee of 1.23 per cent.
Standard Life had an average pension fee of 0.85 per cent, Scottish Widows 0.7 per cent and Aviva 0.69 per cent. PensionBee says those three providers have largely stayed at the same level since the same research was conducted last year.
PensionBee estimates that delays due to paper transfers have cost consumers at least £1bn over the past year.
PensionBee corporate development head Clare Reilly says: “We see that opaque fees, archaic paper systems and shocking charges continue to plague savers in 2017.”