We’ve launched a new campaign to secure better pensions after our research reveals people’s pension pots could be at risk from poor value products and high charges.
The Government’s pension reforms are set to give people more control over their pension pot. This makes it likely that more people will use income drawdown products, which allow them to take money out gradually each year.
However, our investigation uncovered several high charging drawdown products, including one that charges 2.76%. We think this is too high for the mass market and want to see a cap introduced on products sold to customers by their existing provider.
Based on a scenario of someone with the typical pension pot of £36,000, drawing down £2,000 a year, we calculate that a cap of 0.5% would leave someone in our scenario around £10,300 better off than with charges at 2.75%. A 0.75% cap would mean that they have a total of around £8,800 more over their retirement and a 1% cap would give them around £7,500 more.
Read our pensions report