Pension Pay Gap: Women More Likely to be in Rip-Off Pensions Than Men

Most people contribute to their pensions every year. However, with the average person working 11 jobs in a lifetime, keeping track of the performance of multiple pension pots can get quite confusing. Pension providers also often charge in different ways, which can make it hard to know exactly what you’re paying and where your money is going.

To clear the confusion, research from Profile Pensions finds the hidden pension charges you might be paying and what you should be paying. This research has also found women to be more likely to be in an expensive pension plan. 

The Hidden Charges You Might Be Paying

In more modern pensions, your pension provider charges are commonly made up of two factors: Fund charge and platform charge, with the sum of these being your total annual provider charge. But how much should you be paying in pension charges? Many aren’t aware that they even pay fees, let alone how much money they could be losing each year.

Who’s Most at Risk for Expensive Pensions?

Profile Pensions internal data showed women are 19% more likely than men to be in a rip-off pension, where charges exceed 1.5%. Over half of women don’t know where to go to find out what their charges are, meaning they’re less likely to be able to take action to lower their costs.

Over 50’s and those with older pensions are also likely to be paying hidden pension charges. The most expensive pension plans had an average start date of 1997, while cheaper pension plans started much later, around 2006. 

Because of fixed-rate charges, having a smaller pension pot could also mean you pay a higher percentage in pension charges. This means that those with smaller pensions are also likely to be overcharged for their pensions. 

Expensive vs Cheap Pension

Profile Pensions have found 55% of people are in an expensive pension, 31% are in okay pensions and only 14% have cheap pension plans. The data also reveals 1 in 10 people to be in very expensive pensions with charges above 1.5%.

Currently, the average annual provider charge on pensions is sitting at 1.09%, but Profile Pensions recommends pensions with annual provider charges that don’t exceed 0.34%.

Michelle Gribbin, Chief Investment Officer at Profile Pensions explains: “Through our own research and data, we hope to raise awareness on the issue of pension charges and encourage people to take action to check their charges. Most people should be paying much less, ultimately costing themselves thousands of pounds over a number of years which could easily be avoided. Our data identifies a specific group of pension savers who’re particularly vulnerable to be paying very high fees, so it’s important these people act quickly to check if they’re being overcharged and take measures to reduce charges.

What Lower Charges Could Buy You

People pay on average three times more than they should for their pension, which can cost you £18,000 over 20 years and push your retirement back by 2 years. The same amount of money (or less) could buy you a new car, pay for your child’s wedding or 5 family holidays.

Sophia Anderson

Sophia Anderson is a blogger and a freelance writer. She is passionate about covering topics on money, business, careers, self-improvement, motivation and others. She believes in the driving force of positive attitude and constant development.