Are you paying too much for your pension? The Dooley Insurance Group Can Help!

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Are you paying too much for your pension? The Dooley Insurance Group Can Help!

FEES CHARGED by pensions companies can see the value of a person’s pension call by as much as 31 per cent, an official government report has found.

The report by the Department of Social Protection found that a pension fund worth €400,000 could incur charges as much as €120,000.

Someone contributing €250 a month to their pension for 30 years should have a fund worth about €200,000 by the time they retire – or the equivalent of €10,000 per year for each of the 20 years they might expect to live.

If the average annual charge for pension schemes – of 2.18 per cent per year – was applied, however, the final fund ends up dropping in value by €62,000 – meaning the final annual amount is reduced to €6,900.

“A key part of this is to know what level of pension you are likely to receive in retirement and understanding the very significant impact pension charges can have on your final pension fund,” social protection minister Joan Burton said.

“The report shows that apparently small percentages can add up to big reductions in a pension fund over time.”

The report finds that though some occupational pension schemes are priced competitively, many individuals and pension schemes are paying more than they need – with some schemes burdened by major administrative costs.

Bruton said she would prioritise her work in the pensions area, and encouraged consumers to compare prices and obtain the best value in any pension schemes they were considering.

The report makes a series of recommendations on how to improve best practice in the pensions industry, including developing a communications action plan about pension charges and improving trustees’ knowledge and awareness of pensions charges.

The Department is also to undertake further research to see why consumers choose certain pension products, and ensure data on charges is collected by the Central Bank and Pensions Board on a regular basis so that charges can be further scrutinised.

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