People’s Partnership1, which provides The People’s Pension to 6.4 million people across the UK, is calling for pension providers to help people save more for retirement, by offering a single pension pot with the lowest available price on all savings.
While the average worker has 11 jobs during a lifetime2, it is not uncommon for savers of workplace schemes to have multiple pension pots with the same provider and, in many cases, pay different rates of charges.
The People’s Pension is the only independent pension provider to give members a single pot, regardless of how many times they leave and re-join the scheme, all charged at the lowest rate available to them.
This means that if a member joined The People’s Pension through an employer with a base charge of 0.3%3, left the scheme and then returned with another employer on 0.5%, they would continue to pay a base charge of 0.3% on all their savings.
People’s Partnership is now calling on pension providers across the industry to follow suit to help save people thousands more towards their future.
Its analysis shows that a saver with £100,000 split between two pots with a provider which does not offer one pot could pay more than £11,000 more in charges over the course of 20 years compared to someone saving through The People’s Pension best price guarantee on a single pot model.4
Patrick Heath-Lay, Chief Executive Officer at People’s Partnership, said:
“As an organisation that is committed to helping its members build financial foundations for life, our members benefit from having one pot with a best price guarantee, meaning that, not only do they pay just one set of charges, but they also have a better chance of receiving a rebate5 on the charges they pay.
“There are very real examples of savers who have multiple pension pots with the same provider, who are paying significantly differing charges for the same product. We believe that if other pension providers are really serious about putting the needs of their customers first, they should introduce the single pot model and ensure that individuals pay the lowest rate of charges available to them. This would also go some way towards reducing the number of small pots that are currently in circulation.
“Our best available price guarantee is unique to the workplace pension market and will benefit millions of our members over the long term.”
Notes to editor:
- People’s Partnership provides The People’s Pension, the largest independent master trust in the UK, serving more than six million pension savers across the UK and manages more than £22bn in assets. As a business without shareholders, it reinvests its profits with the aim to help customers and achieve better financial outcomes for everyone. 2. Making automatic enrolment work CM 7954 (publishing.service.gov.uk), page 103 3. Scheme Specific Pricing means that different employers will be offered different rate of charges for their employees on a case-by-case basis. 4. A 48-year-old worker earning £40,000 a year, with a £50,000 pot and saving into a pot with 0.75 per cent charge would pay £15,662 in charges over a 20 year period. If that same saver also had another pot with the same provider which had a charge of 0.2 per cent, they would pay £2,818 in charges over 20 years. 5. For a full breakdown of our charging structure visit: https://thepeoplespension.co.uk/member-annual-management-charge/