In a recent study carried out by the former Office of Fair Trading (OFT) concluded that many workers paying into a pension were being short-changed by retirement firms with a complex array of fees where where there were up to 18 different hidden pension charges.
The OFT found the lowest Annual Management Charge (AMC) or pension charges being paid is half per cent and the highest, 2.30 per cent.
Since this investigation, IFA Direct* has been running a campaign to save people money by simply switching their pension to a cheaper scheme with much lower pension charges.
In the last year alone, IFA Direct has arranged in excess of 1,200 pension review appointments through its network of some 30+ IFA firms.
Results back from a recent IFA Direct survey, indicate that pension review appointments are converting at around 8 out of 10 cases, meaning that up to 80% benefit from the review in the form of saving cash. After all, the figures speak for themselves – a £50,000 pension pot -that can reduce its charges from 1.5% to 0.5% will save £500 per year.
The recent changes made in recent pension legislation in April of this year, gives pension holder access to 100% of their pension in the form of taxable cash at the age of 55. Savvy pension holders are now finally waking up to the fact that you can shop around and get a much lower Annual Management Charge, saving thousand of pounds in charges from their funds by turning to discount operators offering identical products for a fraction of the price.
No doubt, many people spend hours on the phone trying to get a cheaper quote on their car insurance. – yet they might only achieve a £50 saving. But switching to a cheaper pension provider could thousands of pounds, which can easily translate into a retirement income of 20% higher**
* All the FCA regulated advisors include both Independent Financial Advisors and Restricted Advisors are clients of RMT Direct.
** Steve Latto, head of pension at Alliance Trust Savings. http://www.telegraph.co.uk/finance/personalfinance/pensions/7963437/How-to-save-12000-in-pension-charges.html
Ryan Mellor, Co-founder at IFA Direct
If you are a financial advisor and you would like to work with us, please visit RMT Direct.
