Admin fees 'could cut value of new pensions'
Over 55’s hoping to enjoy more flexibility with their pension pots from April this year could find their fund reduced by excessive administration fees.
The ‘flexible drawdown’ plans to be on offer are likely to be subject to an initial set-up charge. This, however, is not the issue. Some IFA firms are also planning to charge a percentage of the pension fund as an annual fee to cover future withdrawals and monitoring of the investments. In addition to the IFA charges the pension provider will also apply their fees.
In a recent report, it was revealed that charges made could reduce the fund by as much as a quarter over a twenty year period.
Any fee being charged must be transparent and relevant to the work involved.