Pensioners could be losing up to 10% of their pension pot due to charges levied by providers, according to research by Citizens Advice.
The charity found that 7 in 10 people are not shopping around for different products when accessing their pots.
24% of people who remain with their pension provider did so thinking they had the best value possible while 15% remain to avoid being hit by exit charges.
The report also found:
- people buying annuities are more likely to shop around with 57% checking products with other providers
- 39% bought a drawdown product while 14% of those took cash.
The research shows that around 160,000 people have paid to access their pensions since the reforms were introduced in April 2015.
Pensioners with savings of £20,000 or less who have faced charges are paying on average £1,966 – leading to loses up to 10% of their retirement savings.
Gillian Guy, chief executive of Citizens Advice is calling for a standard £50 charge to cover provider’s administration costs:
“The threat of excessive charges can also put people off making the right pension choices for them. A standard £50 exit fee across all types of pensions will mean consumers can make the most of the pension freedoms.”