Fees can take up to 31% of pension
Almost a third of the value of an individual’s retirement savings can be consumed by charges associated with pension funds, according to a new report.
The Report on Pension Charge in Ireland 2012 was compiled by the Department of Social Protection, with assistance from the Pensions Board, the Central Bank and PricewaterhouseCoopers.
It found that one euro in every six of retirement savings in occupational schemes was eaten away by charges while as PRSAs and executive pensions could see an average “loss” of between 21 and 31 per cent
At the publication of the report senior department officials pointed to “worrying” lack of transparency in the charges associated with funds.
Every pension fund scheme member is, from this year, supposed to receive a pension statement outlining, among other things, the charges levied on their savings.
However, almost two-thirds of trustees said they had difficulty getting some of the information on charges required for this report.
The study found that there was no evidence of a culture in the pensions industry of providing clear information in a simple manner.
Presenting the report, principal officer Patricia Murphy said that, as a rule of thumb, every additional quarter percentage point reduction in yield, or annual fund growth, due to charges reduces the value of the final pension fund by 4 per cent.