Press Release (ePRNews.com) - London, United Kingdom - Aug 08, 2017 - PensionBee has tracked 1,800 pension transfers from 20 providers, and identified big differences when it comes down to costs, exit fees and transfer times.
- One of Britain’s biggest workplace pension providers is charging its member’s annual fees that average 10.4% of the pension, which could eat up small pots
- Exit fees are fairly rare, but where they exist they can be excessive, with some providers charging over 70% of the pension
- A cluster of big providers will take well over 50 days before they transfer money to a new provider, while others offer best-in-class transfers of 12 days
Auto enrollment savers hit by huge costs
The new Robin Hood Index shows us that some providers still insist on making it really difficult to save for retirement. We see that opaque fees, archaic paper systems and shocking charges continue to plague savers in 2017. We have a duty to share our unique customer data in the hope of improving outcomes for all savers across the UK!
PensionBee has found that the average fee of the 173 investigated NOW: Pensions customers is 10.40%. This is because NOW: Pensions charge 0.3% of the pension as well as administrative fees of up to £18 per year. However, as savers switch jobs they accumulate many small pension pots – some as small as £100. Unless pension returns are higher than 10%, over time it is possible that these small pensions will be reduced to £0.
In addition, the analysis also revealed Nest Pensions can charge up to 1.9% of an active workplace pension. While the government has placed a charge cap of 0.75% on workplace pensions, it is possible to meet the requirements of the law through a combination of annual management fees, fixed administration fees, and contribution fees. Unfortunately, the law does not prevent small pots from being “charged out”, which disproportionately impacts low earners and those who frequently switch jobs.
The average pension fee is just under 1%, but some providers are expensive or charge excessive exit fees if you try to transfer your pensions
The analysis also looked at annual average fees and exit charges if you want to switch between providers. Phoenix Life came out most expensive with an average pension fee of 1.43%, closely followed by Abbey Life (1.23%). Most providers such as Standard Life (0.85%), Scottish Widows (0.70%) and Aviva (0.69%) have remained fairly stable since the last PensionBee Robin Hood Index.
However, a number of pension providers charge their customers high exit penalties if they want to switch to a new provider. The highest exit fees (as a percentage of a pension pot) seen by PensionBee were from Friends Life (77.60%), Phoenix Life (73.65%), Abbey Life (48.72%) and ReAssure (15.14%).
Transfer delays continue – and they are costing the UK over £1bn
Since last year’s index, substantial progress has been made on quick pension transfers. Some best-in-class providers such as Legal and General, Scottish Widows, Standard Life and Aviva transfer within 12 days.
But others, including Aegon, Aon Hewitt, Capita, Mercer, and Willis Towers Watson still refuse to adopt electronic transfers, resulting in delays and increased costs for consumers.
PensionBee have calculated that the total cost of consumer detriment due to transfer delays is £1,034,709,651, a cost that could be avoided by transferring pensions electronically.
Clare Reilly, Head of Corporate Development at PensionBee, said: “The new Robin Hood Index shows us that some providers still insist on making it really difficult to save for retirement. We see that opaque fees, archaic paper systems and shocking charges continue to plague savers in 2017. We have a duty to share our unique customer data in the hope of improving outcomes for all savers across the UK!”.
Customer Russell Jones, trying to move an old Friends Life pension hit by a 78% exit fee, added: “Apart from this scandalous fee, I should also mention that Friends Life made viewing this pension online impossible. I’ve been very impressed with PensionBee but horrified with the Friends Life exit fee, which makes it impossible for me to move my pension to a provider of my choice.”
Customer Paul Glover (37), who’s faced Aegon transfer troubles, concluded: “All of my other transfers have been seamless. My immediate reaction is that they’re [AEGON] just using scaremongering tactics, and I don’t like it. It’s a bit like when a newspaper writes a scary headline… but when you read the actual article it’s not too bad. This is just making my life difficult.”
Jasper Martens and Clare Reilly
0203 859 5788 (direct)
· More case studies available on request
· Attachment: The Robin Hood Index 2017 table
· Romi Savova, CEO of PensionBee and Clare Reilly, Head of Corporate Development, are available for interview or comments
· For more information on the £1bn costs of paper transfers or how we calculated the 10.40% NOW:Pensions management fee, please contact Jasper Martens for a copy Source :
Business Info : PensionBee