pension fees

Are You Losing Thousands Because of an Old Pension?



Posted on: 26th May 2022

If you are among the many that opened a defined contribution (DC) pension at some point in the 1990s 0r 2000s, the charges that you have been paying could be much higher in comparison to pensions that are being opened in more recent years. When you add up the difference between now and your retirement age, the amount could be thousands of pounds in over-market-value pension fees.

Poor Value

Recent research conducted by the Institute for Fiscal Studies reveals that the older DC pensions are proven to deliver a poor value for money, especially for those in their 50s. The difference between the 1.1% average annual fee of the 1990s and 0.8% for ones opened in the last decade may seem small, but it can certainly add up over the decades.

As an example, someone in their 50s with a pension of £21k could have an additional £2.4kby the age of 67 when they switch from a 1.1% charging pension to one charging a fee of 0.8%. This is assuming that the annual investment returns in the future are still in line with the average of the last 5 years.

This would mean that the larger the pension is, the more you stand to gain from the switch. If you do have an older pension, moving your retirement savings into another scheme could make a lot of sense.

Getting the Best

In today’s worldwide economy, it becomes vital for people to get the very best out of the retirement savings they have accumulated over their working lives. With fee changes often higher than those of more recent pensions, older pensions are at risk of being poor value for money. Older DC pensions may also not be invested in a way that you would like, and asset allocation plans made many years ago may no longer suit your current retirement plans.

For today’s environment, your pension needs to reflect your investment risk profile and other considerations – such as when you do plan to retire. Even if you o longer contribute to a pension, it is still important to assess your performance and engage with actions to better achieve your goals.

Assessing Your Pension

Chances are a DC pension taken out decades ago is delivering poor value for money. To determine your pension’s value, it is important to have it assessed by independent financial advisers Cheshire to ensure that the fees you are paying compare fairly with today’s available alternatives.

Contact the team at Haven IFA today for up to date pension fees, pension advice Manchester and better retirement planning Cheshire.