Savers are losing up to three quarters of their pensions in little-known fees charged by the investment funds that manage their money, a report by senior pension experts warns.
Private pensions in Britain pay out on average half as much retirement income as equivalent schemes in Europe, the report says, with hidden costs blighting the retirement plans of millions.
The report, by David Pitt-Watson, one of the country’s leading pension fund managers, and a team from the Royal Society for the Encouragement of Arts, Manufactures and Commerce, warns the Government that the system is in need of urgent reform to bring these costs down.
Earlier this year, The Daily Telegraph disclosed that a range of little-known fees and levies typically wiped more than £100,000 off the value of a middle-class worker’s private pension.
Mr Pitt-Watson, the boss of Hermes, which manages the BT pension scheme, has written to Steve Webb, the Pensions Minister, to set out his concerns.
His three-year study highlights how British savers suffer in comparison with their European counterparts because of the fees charged by pension funds.
While the annual levy can appear small, its effect after decades of saving is substantial, the report warns. This is because the fee is calculated annually as a percentage of the total amount in the pension fund. Each year, therefore, the amount levied increases.
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