Millions of workers could miss out on retirement money stashed in lost pensions, pension experts are warning.
Three out of four workers claim that they do not know how much their pensions are worth or how much they will have to spend in retirement.
A similar number (71%) of retirement savers with direct contribution pensions have no idea of the charges they are paying pension providers and fund managers, says a study by retirement advice firm Portafina.
The advisers argue that rampant charges can eat away fund values and cutting fund charges by 1% a year can make a £27,000 difference to the value of a pension fund.
Valuable guarantees and benefits lost
They also claim workers transferring out of direct benefit pensions, which are mainly workplace schemes, could be losing valuable guarantees and benefits without realising if they make the switch on an online execution-only platform.
Nine out of 10 pension savers confessed they did not take financial advice before transferring a pensions, while 77% agreed they did not know if they had signed away valuable guarantees and benefits.
Jamie Smith-Thompson, Managing Director at Portafina, said: “Moving into the digital world is a big positive step forward for the pension industry. Initiatives like the Pensions Dashboard currently being developed by the government will go a huge way towards helping the nation to better manage and keep on top of their pension savings.
Pension questions savers should ask
“While it’s great that there are more online options emerging for moving or consolidating pensions, it can come with huge risk. If it feels too easy to move your pension, such as only taking a couple of clicks to complete the process, then it’s time to think twice about whether this is the right move for your hard-earned savings.
“How your pension will be invested, the fees charged, and how your new scheme compares to the old one, are all questions you should confidently know the answers to before making any decisions to jump ship from your current provider.
“The bottom line is, it’s best to seek expert help before making any final decisions. Having all your pensions in one place can be very convenient and sometimes saves on charges. But depending on the pensions that you are consolidating, if you are not careful you could end up paying more in charges, losing valuable benefits and guarantees, or seeing your investments placed in funds that are not suitable for your goals.”