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Pension providers’ fees and exit charges exposed

Friends Life and Phoenix Life were found to have the highest exit fees

Pensions-savings-retirement-piggy bankPension 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.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. Yes I’d like to comment.
    I don’t know much about PensionBee or their beekeepers, but judging from their stated aim “fair deal for everyone” I should be a fan and indeed if their stated aim is their actual aim then I will be, however, one should treat the scandalous claim in the headlines with some degree of scepticism, which does not exactly shower credibility on the piece by Kate mariner or the research presented by PensionBee.

    Check out the Robin Hood Index Table – it’s a joke.

    There are so many questions to ask in relation to it that it is difficult to know where to start.
    For instance, how about these for starters

    1 Could we see the research rather than just be presented by the claims, because I can’t find it anywhere.
    2 How about some context? On what basis are you presenting this research? Is it a 30 year old having taken out a plan ten years ago at £20 per month, into an initial unit type scheme, stopped after five years one year transferring a (nominal) £2000 fund (£600 after exit charge) as part of a job lot or what? Because guess what, of course the exit charge is going to be outrageous.
    3 Highest AMCs quoted on the research summary of £169% per annum with Friends against an average 0.63% Do us a favour – tell us the circumstances.
    4 Now Pensions have a highest AMC of 4900% Really? What are the circumstances that led to this because without the context this is meaningless.
    5From what I can see they tracked 1800 transfers from 20 providers yet only managed to come up with five exit fees? How does that work? Why are there no other figures presented.

    Why didn’t Kate pursue these outrageous claims and get some insight into how the research conducted or was the thrill at being able to reveal such shocking numbers so distracting that any thought of checking authenticity didn’t cross her mind?

    Yes I want fairness for all, but that has to be backed up with a credible way of passing judgement, not just chucking out this rubbish – it’s lazy and does nothing to encourage a sensible debate.

    Ian Coley

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