Over £1 billion in savings have been lost from pensions due to “rip-off” charges. Reports indicate that a staggering £1 billion in pension funds has been erased in what is described as a harsh impact on pension holders due to rising costs of living.

According to The People’s Pension, UK savers may have lost £1.2 billion in just one year because of inadvertently transferring to pension schemes with higher fees. The number of individuals transferring their workplace or private pensions without seeking professional advice has surged by more than 50% over the past four years.

The financial loss from moving pensions to schemes with elevated charges has increased from £792 million to £1.2 billion in 2023. Patrick Heath-Lay, CEO of The People’s Partnership, expressed concern, stating, “It’s extremely alarming that our estimates suggest more than a billion pounds may have been lost due to people moving to higher-cost pension schemes.”

“Given the increasing market activity around transfers, this could potentially cost consumers billions more annually once pensions dashboards are introduced. It’s crucial to take action now to ensure individuals have the necessary information to compare their options when considering a transfer.”

The research also indicated that individuals who transfer from lower-cost workplace pensions to higher-cost retail options could forfeit up to 20% of their pension pot by retirement, potentially requiring an additional three years of work or more.

Rebecca O’Connor, Director of Public Affairs at Pensionbee, noted: “It’s important to remember that some pension providers charge percentage fees (which is the majority), while others use flat-rate fees. To make a proper comparison between current fees and those of a new scheme, you might need to convert percentage fees into monetary values based on your total pot size, or vice versa.”