Savers are transferring their pensions without understanding the charges involved and could be more than £70,000 worse off in retirement as a result, analysis by People’s Partnership has shown.

Nearly three-quarters (72 per cent) of people who had recently transferred their pension did not know precisely what the fees for their old pension were or what they were being changed for their new pension.

Furthermore, more than one in 10 (11 per cent) did not think that their new pension had any fees or charges.

People’s Partnership’s analysis found that a 30 year old earning £30,000 who moves a £10,000 pension pot from a provider charging 0.4 per cent to one charging 0.75 per cent would leave them £32,894 poorer when they retired at 67.

This rises to £59,523 worse off in retirement if the same person transferred a £50,000 pot, and to £72,689 if they earned £45,000 and moved a £50,000 pension.

People’s Partnership urged the pensions industry to become more transparent and help savers understand key information when transferring their pensions to ensure they are not making detrimental financial decisions for their future.

Its research found that only half (50 per cent) of respondents felt it was easy to find information on fees and charges from both their old and new pension providers.

Furthermore, the provider said its findings suggested fees were not “anywhere near as important a consideration as they should be” when transferring a pension, and people did not appreciate how differences in costs that appear small can lead to significant differences in real terms.

“While there are many factors that can make a pension attractive, the two fundamental aspects are investment returns and charges,” commented People’s Partnership CEO, Patrick Heath-Lay.

“Unfortunately, very few people know exactly what they are being charged for their pensions and they are being let down by an industry that doesn’t make this information easy to find or understand.

“If people can’t make an informed decision about the value they are being offered by different providers, they risk losing thousands of pounds from their retirement pots. This lack of transparency is an enormous issue that pensions providers have to address.

“Our research shows the real-world impact of small differences in percentages are incredibly hard to grasp, so the onus is on the pension industry to make sure consumers understand what they are being charged.

“We passionately believe that there must be an obligation on pension providers to give clearer information to those savers who are considering transferring and the industry must move to provide comparable consumer focused value metrics.”

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