Pension management charges explained
Pension management charges are commonplace and cover the administration costs of managing your pension. Most will also include investment charges, which are the costs associated with researching and selecting the various assets your pension savings are invested in.
Management charges need to be paid once a year and are either charged as a flat fee or a percentage of the value of your pension pot. Schemes are allowed to charge different amounts, and the more specialised your pension investment funds, the higher your pension fund charges will be.
Usually charges on pensions are lower than on other investment products such as ISAs, however it’s important to consider the long-term impact that pension management fees can have on your savings before selecting a pension. Low fee pensions, or those that reduce as your savings increase, will enable you to keep more of your pension for retirement. Over time, large pension management charges can dramatically reduce your savings. You can find out how much you’re being charged by checking your pension or speaking to your scheme administrator.
Other pension charges
Management charges are always stated upfront by pension providers. However, additional and sometimes hidden charges may also apply. Two of the most common pension charges are entry and exit fees which have to be paid if you close down a pension and/ or open a new one. These fees can sometimes be referred to as pension transfer charges as they are charged when you close an old pension and move your savings into a new pension scheme.
Other pension charges may include an underlying fund fee; which is used to pay for the management of each fund in your portfolio, platform fees; if you use an online platform to manage your investments and inactivity fees; which are charged if you stop making contributions to your pension. Watch our Pension 101 on the types of pension charges below.
Pension fund charges comparison
Each year PensionBee examines the best and worst of the pension industry and publishes its findings in the Robin Hood Index. You can find out which pension providers charge the most fees and who provides a low cost personal pension in our 2018 index.
PensionBee charges a single annual management fee and it decreases the more you save. For pensions with a value under £100,000 you’ll pay between 0.5% and 0.95%, depending on the plan you choose. Once your pension is more than £100,000 your fees will go down, reducing by half for the portion of your savings that exceeds £100,000. Find out more about joining PensionBee and sign up today.
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 24-09-2018