A new study has revealed that 83 per cent of UK adults have no idea what they are paying in pension fees, either in pounds or percentage terms.
The research, conducted by interactive investor is sounding the alarm over a perceived widespread lack of awareness that could be costing millions of savers dearly.
All pension plans come with charges, however the size and the reason for these levies will vary depending on the provider.
Some firms, such as PensionBee, will charge their customers an annual management fee which goes towards paying for the expenses involved with the pension's administration.
A new survey is highlighting how the public know about hidden pension fees
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However, some providers may charge different charges, including an underlying fee to money managers to an inactivity fee if cash is not paid into plan.
Based on interactive investor's survey, the vast majority of pension savers remain in the dark about charges that directly impact their retirement outcomes.
Craig Rickman, a pensions expert at interactive investor, warned: "Every pound you pay in fees that doesn't translate to a better outcome, is a pound less for you to enjoy in your golden years."
He adds that while pension portability allows savers to switch providers for better value, "many don't know how much their current providers charge. They have no idea whether their existing pensions offer fair value".
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Workers are encouraged to save in their workplace pension to ensure a healthy retirement
PexelsAnalysts warn that this knowledge gap could result in millions unknowingly overpaying for their pensions, reducing their retirement income over time.
Experts note the complexity of pension fee structures makes it difficult for consumers to grasp the true cost of their savings plans.
Account fees are typically calculated as a percentage of savings, often with tiered rates that decrease for larger pots.
Whilst this may seem attractive for those just starting their savings journey with smaller amounts, the percentage-based structure means fees grow alongside pension pots over time.
As retirement savings accumulate over decades, these expanding charges steadily erode the final value of pension funds.
Rickman describes the situation as "incredibly concerning", noting that overpaying in fees "can take a serious toll on people's future retirement pots, especially when the fees are deducted in ways that can go unnoticed".
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Pension plans come with hidden costs for savers, experts warn
GETTYThe difficulty in obtaining clear fee information compounds the problem. "There are just too many hoops you have to jump through to be able to find out what you're paying in pension fees, overall," Rickman said.
Camilla Esmund, the senior manager at interactive investor added: "It’s time for providers to be crystal clear about what they charge and how this impacts their customers. interactive investor’s flat-fee model removes the guesswork – our customers know exactly what they’re paying, and crucially, what they’re getting in return.
“To help savers take control of their pensions, ii has developed a SIPP charge comparison tool. All you need to do is punch in the total value of your pensions to see how various leading pension providers’ costs stack up against each other."
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