A common pension mistake could force savers to work years longer, as some unknowingly move their funds from low-cost workplace pensions to more expensive ones, a top provider has warned.
The People’s Partnership, which operates the People’s Pension, has highlighted the need for better information to help individuals compare their pension options before making transfers.
Their analysis of 2023 data revealed that up to £1.2billion in savings could be at risk from ill-informed transfers.
This issue could cost consumers billions more once pension dashboards—tools that will allow users to view all their pension pots in one place—are fully implemented.
Patrick Heath-Lay, CEO of the People’s Partnership, expressed concern that the growing trend of pension transfers could significantly harm savers’ financial futures.
Mr Heath-Lay said: “It’s incredibly worrying that our modelling shows more than a billion pounds is potentially lost due to people transferring to higher-charging pension schemes.
“Given market activity around transfers is escalating, this could easily cost consumers billions a year more once commercial pension dashboards are introduced.
“With adequacy of saving levels still a significant factor to future pension policy success, this turbo-charging of the transfer market will ultimately be to the consumer’s detriment, meaning we need to act now to ensure that people have the information they need to compare their options when considering a transfer.”
A Department for Work and Pensions spokesperson said: “We are committed to ensuring people have the right support and information they need to make informed choices about their financial futures.
“This strikes the right balance of providing vital protections as well as freedom of choice in how to use their pension savings.
“Our Value For Money Framework will mean that savings are invested well, they are not being eroded by high charges and that schemes are helping members make the right decisions whilst contributing.”
