How to check your pension charges

Find any annual statements or original documentation for your old pension or pensions

You might have received these in paper form in the post, or via an emailed link to an online account.

If you have changed address, you might not have up to date pension statements. 

If you can’t find your statements or can’t remember which companies your old pensions are with, then consider using the free pension tracing service. You will need your National Insurance number for this. 

If you can remember the name of your provider, check their websites for details on how to access your pension.

You can also contact your former employer for details. 

Once you’ve found the documents, you need to look for the next bit of key information…

Find out what type of Pension you have

You might already know this even without looking at your old statements, but the first thing to understand is the type of pension you have. This is important, because some types of pension you can move easily, some you can’t and for some, you might need advice first.

There are two main types of pension:  Defined Contribution and Defined Benefit.

Defined Contribution pensions are a type of pension that allow you to build up a pot of money, that you then use to take an income from in retirement. It’s important to note that sometimes these can have benefits and guarantees that you need to consider when weighing up any charges you pay. They are also sometimes known as ‘money purchase’ pensions.  

Defined Benefit pensions have a guaranteed retirement income or other valuable guaranteed benefits and are more complex.

Sometimes, you might find your pension is a combination of the two. These are called ‘hybrid’ schemes. These can also come with guarantees, a bit like defined benefit schemes.

The following steps only apply if you want to check the charges of a Defined Contribution pension. 

Search for key charges information 

A quick recap of the places you can find charges information:

Key Source 1 - The Original Documentation you were given when you started your pension 

Key Source 2 - Your Pension Statement received each year from your pension provider

Key Source 3 - Any  Letters or Emails notifying you of changes in charges & fees 

Key Source 4 - Online Access that allows you to view pension information and transactions 

Key Source 5 - Provider Websites that detail charges information about your specific pension product. 

Information about the charges you are paying should be given. They might be expressed as percentages or in pounds and pence. Remember that if your provider charges a percentage, the amount coming out each year will vary according to your pot size. 

Identify each of the charges you pay

Reading through each of your key information sources identify the different charges that are taken from your pension. Understand how these are calculated and try to decide if each charge is a charge levied by your pension provider, or one from the providers of the underlying investments, or both. This bit isn’t always straightforward. The names for different types of charges are not always consistent between different providers, making it tricky to know whether you are comparing apples with apples. But there is one main difference in charge types you need to know about:

The difference between Provider & Investment Charges 

When comparing pension charges, it is very important to understand that the overall amount you pay is made up of charges from different sources. First, there are charges added by your pension provider. Then, there are separate charges imposed by the provider of the investments that make up your pension. : 

Pension provider charges: these are taken to pay for running and administering your pension. They vary significantly from one provider to another. 'Providers’ include ii, Aviva, Standard Life, Hargreaves Lansdown, Scottish Widows, Aegon, Royal London

Investment provider charges:  these  pay asset managers for investing your pension. They also vary and depend upon the type of investment you choose and the investment provider. Examples of investment providers are Blackrock and Baillie Gifford.

Check how these charges compare 

Once you have worked out what you pay in charges, the next thing you need to know is whether these charges are relatively good value For this, you’ll have to check out a few other providers. Remember that converting percentages into pounds and pence can make the charges comparison easier. It can also help to think about how much you pay each year or each month.

If in doubt, check with your pension provider 

If you are in any doubt about your charges or any other features of your pension it is always a good idea to contact your provider directly. They should be able to help you understand the types and level of charges you pay, together with any other features of your pension.