The majority of pension savers are unaware of how much they are paying in annual pension charges, with some not knowing that these charges exist, research has found.
Pension adviser Profile Pensions found out of 2,096 pension holders it spoke to only 16 per cent were aware that they paid annual charges set by their provider.
Two thirds thought they did not pay annual charges and 21 per cent did not know how much their charges were.
About half of savers admitted they had no idea how to find out what charges they paid.
Michelle Gribbin, chief investment officer at Profile Pensions, said the lack of knowledge on charges should be “a massive cause for concern”.
Ms Gribbin said: “Add to this the thousands of people that are being needlessly overcharged and there are some serious questions to be answered about why awareness is so low.
“It’s clear that the industry needs to take action and providers need to work harder to educate consumers.”
According to Profile Pensions people pay an average annual charge of 1.09 per cent, which the adviser said was three times more than they should be paying.
These charges could cost pension holders £18,239 over 20 years, based on a pension value of £50,000 growing at 5 per cent a year, which could push retirement back by up to two years, the adviser stated.
Ms Gribbin added: “As impartial advisers we see instances every day where customers will have smaller pensions at retirement than they should due to lack of transparency from providers.
"This is simply unacceptable and means that thousands aren’t realising the full potential of their pensions savings.
“These statistics are shocking and a timely reminder that people need to take action, as early as possible, to make sure that they are facing retirement confident that they have enough money to live on.”
Ivor Harper, director at advice company Park Financial Limited, said: “I am not surprised by this at all.
“As an adviser, I regularly have cause to direct policy enquiries to providers.
"What comes back is (all too often) a raft of information about performance, fund range, etc but the one thing they are frequently very coy about is the charges - and as an 'evidence based adviser', that's the first thing I want to see.”
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