An interesting article was recently published in The Sunday Times (29/11/2020), about the charges which are levied on pensions.
Essentially, the article compared the pension outcomes of two individuals and the effect the charges had on their respective funds (all other factors being equal). The article concluded that the saver who paid the lowest charges could have been £128,000 better off and have a pension pot that lasted 16 years longer by using a pension provider with low charges.
Is this revelatory news?
If you fuel your car at £1.05 per litre, all things being equal, it is likely to go further for that tank than if you paid £1.15 per litre.
Many people now have workplace pension schemes primarily due to automatic enrolment legislation, making it mandatory for employers and employees to pay into a plan. The charges cap placed on workplace pensions used for auto-enrolment is 0.75%, but there are pension schemes around which charge a lot less.
As an employer compelled to pay into a workplace scheme, doesn’t it make sense to maximise the return on investment based on this expenditure?
Isn’t it simply a duty of care issue? Why wouldn’t you want your valued employees to achieve the best value possible for their funds? After all, they are paying in too.
For help on this issue from a qualified adviser, Booking in for a chat at The Benefits Lab.