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Experts warn about pension mistake that could cost you over £40,000: "Losing out on precious retirement income"

ended 16. October 2025

EXPERTS have warned about the mistake many make on their pension that could cost you over £40,000.

The majority of UK pension savers, 83 per cent, have “no idea” what they’re paying in pension fees, according to research from Interactive Investor.

A lack of knowledge may be leading millions vulnerable to poor value and reduced retirement outcomes, as they unwittingly pay over the odds for their pensions.

And experts say it may well be over £40,000 that they are missing out on.

Antonia Medlicott, Founder & MD at London-based Investing Insiders, said many just don't know what they are paying in fees.

She added: “There is a big knowledge gap when it comes to understanding pensions. Pension fees, in particular, are very poorly understood. And that means far too many people are paying more than they need to be - and losing out on precious retirement income as a result. 

"Differences of less than one per cent might not seem worth worrying about. And over the course of one year, you could only be talking about relatively small amounts. But it's when you start compounding those differences over the lifetime of a pension that you see how important fees are. 

"Let’s say you have £50,000 invested for 30 years and growing at 5% per year: With 0.5% annual fees, you’d end up with £187,265 at the end. With 1.5% fees, you’d only end up with £140,340. That’s a whopping £46,925 difference. Those kinds of figures could mean the difference between the retirement of your dreams and one plagued by money worries.”

Dr Ramin Nakisa, Managing Director at PensionCraft Ltd, said the fees add up over time and could even tip into the hundreds of thousands of pounds.

He continued: “It’s always worth reviewing the fees you are paying for the management of your pensions and investments as even a small percentage difference can add up over time. After 30 years and compounded interest, you could be looking at 10s of thousands if not hundreds of thousands of pounds difference. 

"Of course, where the wins are greatest are for those who have taken the time to educate themselves and manage their own funds with the benefit of only paying minimal platform fees. 

"A solid global tracker is likely to give similar returns to managed funds but with maybe a whole percentage point or more difference in professional fees, a pension that has grown from say £200,000 invested over ten years at an average of 6% a year, will see your pot worth netting an amount of just under £360,000 if the fees are just 0.15%. 

"The same amount invested with annual fees of 1.5%, would only be returning £310,000, with over £40,000 of your gain being ultimately lost to professionals.”

Scott Gallacher, Director at Leicester-based Rowley Turton, said it's about striking the right balance.

He added: "Pension fees are definitely worth keeping an eye on. Even small percentage differences can add up to a surprising amount over time, so it’s sensible to check what you’re paying. That said, cost isn’t everything. 

"As independent advisers, we always want our clients to get good value for money — not just low costs. It’s about having a pension that’s well run, properly invested, and matched to your long-term goals. 

"A cheap-as-chips pension isn’t much help if it’s not performing or doesn’t suit your needs. Sometimes paying a little more for the right plan can actually leave you better off in the long run. The key is striking the right balance between cost and quality."

David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, agreed, adding: "It’s always worth reviewing and comparing your pension provider’s fees to ensure your hard-earned savings are working for you and not your provider. Many paid-up pensions continue to incur ongoing charges despite little or no growth, as they are no longer being actively managed. 

“Some funds justify higher fees with the promise of active management and potentially stronger returns, though this is not always the case. Seeking independent advice from a pension expert can help you assess fund performance, ongoing fees, and your personal attitude to risk. Regular reviews are also invaluable to make sure you remain on track to achieve your retirement goals and are in the most appropriate funds.”

Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said you need to make sure you're getting value for money.

He continued: "It's never a bad idea to check and question your pension. The key consideration is value, not cost. What are you paying, what do you get for that and is it value for money? The argument goes that if you cut your costs then it's more money in your pot but that only works if it's a like for like swap. 

"Making sure you're in the right risk level fund is more important than shaving a little bit off your costs. The landscape has improved a lot over the past decade. Older pensions may be more expensive but there may also be guarantees in them so tread carefully."
 

10 responses from the Newspage community

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Editor
Antonia Medlicott
Founder & MD at Investing Insiders
There is a big knowledge gap when it comes to understanding pensions. Pension fees, in particular, are very poorly understood. And that means far too many people are paying more than they need to be - and losing out on precious retirement income as a result.

Differences of less than one per cent might not seem worth worrying about. And over the course of one year, you could only be talking about relatively small amounts. But it's when you start compounding those differences over the lifetime of a pension that you see how important fees are.

Let’s say you have £50,000 invested for 30 years and growing at 5% per year: With 0.5% annual fees, you’d end up with £187,265 at the end. With 1.5% fees, you’d only end up with £140,340. That’s a whopping £46,925 difference.

Those kinds of figures could mean the difference between the retirement of your dreams and one plagued by money worries.
Star Quote
Copy

Dr Ramin Nakisa
Managing Director at PensionCraft Ltd
It’s always worth reviewing the fees you are paying for the management of your pensions and investments as even a small percentage difference can add up over time. After 30 years and compounded interest, you could be looking at 10s of thousands if not hundreds of thousands of pounds difference.

Of course, where the wins are greatest are for those who have taken the time to educate themselves and manage their own funds with the benefit of only paying minimal platform fees.

A solid global tracker is likely to give similar returns to managed funds but with maybe a whole percentage point or more difference in professional fees, a pension that has grown from say £200,000 invested over ten years at an average of 6% a year, will see your pot worth netting an amount of just under £360,000 if the fees are just 0.15%.

The same amount invested with annual fees of 1.5%, would only be returning £310,000, with over £40,000 of your gain being ultimately lost to professionals.
Copy

Editor
Scott Gallacher
Director at Rowley Turton
Pension fees are definitely worth keeping an eye on. Even small percentage differences can add up to a surprising amount over time, so it’s sensible to check what you’re paying. That said, cost isn’t everything.

As independent advisers, we always want our clients to get good value for money — not just low costs. It’s about having a pension that’s well run, properly invested, and matched to your long-term goals.

A cheap-as-chips pension isn’t much help if it’s not performing or doesn’t suit your needs. Sometimes paying a little more for the right plan can actually leave you better off in the long run. The key is striking the right balance between cost and quality.
Copy

Editor
Eamonn Prendergast
Chartered Financial Adviser at Palantir Financial Planning Ltd
Your pension could be leaking money, and you might not even know it. it’s absolutely worth comparing your pension provider’s fees even small percentage differences can make a huge impact over time. Platform fees cover the cost of administering your pension, and these vary widely. Some platforms cap their charges, which can make a significant difference for larger pots over many years. If your pension grows to several hundred thousand pounds, a difference of just 0.25% a year might not sound like much, but it could cost tens of thousands over your lifetime. For instance, a £200,000 pension growing at 5% annually over 25 years would reach around £561,000 with 0.75% fees, versus nearly £598,000 with 0.5% fees a £36,000 difference. A quick review can make your retirement pot work considerably harder and possibly allow you to retire earlier
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Editor
Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
It's never a bad idea to check and question your pension. The key consideration is value, not cost. What are you paying, what do you get for that and is it value for money? The argument goes that if you cut your costs then it's more money in your pot but that only works if it's a like for like swap. Making sure you're in the right risk level fund is more important than shaving a little bit off your costs. The landscape has improved a lot over the past decade. Older pensions may be more expensive but there may also be guarantees in them so tread carefully.
Copy

Editor
David Stirling
Independent Financial Adviser at Mint Wealth
It’s always worth reviewing and comparing your pension provider’s fees to ensure your hard-earned savings are working for you and not your provider. Many paid-up pensions continue to incur ongoing charges despite little or no growth, as they are no longer being actively managed. Some funds justify higher fees with the promise of active management and potentially stronger returns, though this is not always the case. Seeking independent advice from a pension expert can help you assess fund performance, ongoing fees, and your personal attitude to risk. Regular reviews are also invaluable to make sure you remain on track to achieve your retirement goals and are in the most appropriate funds.
Copy

Editor
Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
Fees and performance the two sides of the same coin, both impact what you end up with. It’s important to know what fees are being charged on your pension and for what service, and a good adviser will recommend the best value for money. Beware of some larger firms only offering their own products as this is when what you are paying for becoming a bit opaque. The regulator doesn’t like this and things are changing, but at a glacial pace.
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Editor
Anita Wright
Chartered Financial Planner at Ribble Wealth Management
There is a persistent myth that pension providers are “hitting people with hidden fees”. In fact, providers must disclose all material costs and charges clearly. Is it worth comparing fees? Yes—but with context. Charges are only one element of suitability. A slightly more expensive platform can be justified if it offers better functionality (drawdown options, robust online service), a wider fund range, superior rebalancing tools, or features you genuinely need (flexible death-benefit nominations). Pension planning is goal-led: the end objective—adequate, reliable retirement income—matters more than winning a race to the bottom on headline fees. That said, small fee differences compound over time, so benchmarking is sensible. Pension planning is not solely about minimising charges; it is about achieving the right outcomes at a fair, transparent cost. Use fees as a disciplined checkpoint, not the destination.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
As a sophisticated investor, my pension sits in a SIPP equity account with FreeTrade that costs me only £120 a year and no trading fees. This may not be the perfect solution for everyone, but if you know what you are doing, this account keeps the control firmly in your hands as you decide the trades. The industry deliberately cultivates consumer ignorance because pension switching requires active decisions that most workers avoid, creating captive markets where incumbent providers run a monopoly from procrastination and complexity. While mortgage lenders face strict affordability rules and transparent fee disclosures, pension providers operate under regulatory frameworks that favour obfuscation over clarity, layering charges through management fees, platform costs, and exit penalties that make genuine comparison nearly impossible for the lay person. For most people, an automated low cost robo solution will deliver superior returns over complex, active management though.
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Mark Andrews
Advisor at Finance Energy
The way pension documents are put together there aren't any fees that I would describe as hidden, however I accept that they are not easily interpreted to the unfamiliar eye. My view is that there are too many variables at play to say if the example quoted is positive or negative just on the metric given. The providers are simply offering a service at a rate they think is fair value for what they offer. If someone has ended up with something unsuitable they should make a change as providers can't move into the advice space so in this scenario I couldn't find fault with a provider. The reality is that modern consumers have a belief in their own research and ability to understand the complex but are quick to bemoan they have been misold their own purchases. So simple answer to the question for me is no. Nobody is being hit by hidden fees.