Types of Pension charges

Every pension scheme charges its members and comparing them can be tricky. Charge types and amounts usually vary between providers, which can make a big impact on your savings. Even with the same charge type, providers often deduct different amounts.

Below you can find out how to check your current charges, and how to make sense of what they mean in order to compare them.

Providers and their charges

We’ve put together a list of some of the most common pension providers and the ways you can reach them to get a breakdown of their charges. We suggest you review your own pension policy information or contact your provider for the exact fees.

Aegon

Aegon has multiple different charging structures. Workplace pension charges often vary on a company-by-company basis. It may be best to log in to your online account to find out your exact charges. You could also phone Aegon’s contact centre to make sure.

Website: aego n .co.uk

Phone number: 0345 6100 072.

Legal & General

Legal & General has multiple different charging structures. Workplace pension charges often vary on a company-by-company basis. It may be best to log in to your online account to find out your exact charges. You could also phone Legal & General’s contact centre to make sure.

Website: legalandgeneral.com

Phone number: 0345 077 8778

Scottish Widows

Scottish Widows has multiple different charging structures. Workplace pension charges often vary on a company-by-company basis. It may be best to log in to your online account to find out your exact charges. You could also phone Scottish Widows’ contact centre to make sure.

Website: scottishwidows.co.uk

Phone number: 0345 716 6777

Aviva

Aviva has multiple different charging structures. Workplace pension charges often vary on a company-by-company basis. It may be best to log in to your online account to find out your exact charges. You could also phone Aviva’s contact centre to make sure.

Website: aviva.co.uk

Phone number: 0800 158 3142

Nest

As of 12 November 2024, Nest charges an annual management charge based on the value of a member’s savings:

0.3%

It also charges a contribution fee, a percentage based on the amount being paid into the scheme:

1.8%

The 1.8% charge is taken from each contribution you make. So, if you are not contributing to this pension, and you want to compare it to The People’s Pension, just enter the 0.3% charge in the annual management charge box for comparison purposes.

Website: nestpensions.org.uk

Phone number: 0300 020 0090

Standard life

Standard Life has multiple different charging structures. Workplace pension charges often vary on a company-by-company basis. It may be best to log in to your online account to find out your exact charges. You could also phone Standard Life’s contact centre to make sure.

Website: standardlife.co.uk

Phone number: 0800 970 4131

Different charges

We refer to our charge as the ‘annual management charge’ or ‘AMC’. Our pension consolidation calculator includes this and the ‘monthly’ charge’.

Below is a list of the most common charging structures that you should be aware of – although please bear in mind, there could be others as well.

1. Annual management charge

An annual management charge (AMC) is a fee deducted over the course of a year. It’s normally a percentage value of a member’s savings but can also include a monthly or annual fee too.

For example, if you had £100 in a pension scheme with a ‘0.5%’ annual management charge, you’d pay 50p. Or, for example, if you had £1000, the charge would be £5 (the sum is the amount you have invested multiplied by 0.5%).

While it’s called an annual management charge, the fees may be taken incrementally throughout the year.

Some providers, including us, lower their charge as a percentage of savings depending on how much is invested (see also ‘stepped’ and ‘tiered’ charges). So, as your savings increased, the percentage you’re charged would go down.

This is automatically included in the pension consolidation calculator for our charge.

If you find stepped or tiered charges for your other pensions, contacts us, as the calculator will not be able to perform this comparison.

2. Monthly charge

Like the annual management charge, some providers may include a monthly fee. This is often in addition to the annual charge.

We have an option to add a monthly amount to our pension consolidation calculator, but if another provider discloses their charge as an annual fee, you can divide it by 12 and add that amount to the calculator.

3. Platform charge

Also known as ‘service’ or ‘administration’ charges, these are the fees a member pays to cover the administration of their service.

This is normally a percentage charge, which can sometimes also lower depending on how much someone has saved (see also stepped and tiered charges for more info.)

4. Fund charge

Some providers may charge for their individual funds on top of their other fees.

For example, you may pay an annual management charge for your pension scheme, but if you also select a specific fund as part of that scheme, you may have to pay the fee that goes with it as well.

It’s always worth checking if this is the total charge or in addition to other charges!

Our fund charges are already included in our 0.5% management charge.

5. Pension transfer charge

We don’t charge members for transferring their pension, in or out. However, it’s worth bearing in mind that some providers might. This means you may incur charges you were previously unaware of when it comes to making decisions around your money.

6. Set-up charge

These are charges an individual may have to pay for setting up their pension. They’re more common with self-invested personal pensions (SIPPs), a type of personal pension which is like a workplace pension but which has more flexibility around investments. Unlike many workplace pensions, they often include set-up charges, which can vary in cost.

We don’t apply a set-up charge.

7. Contribution charge

A contribution charge is a fee a member pays when they add money to their pension scheme. While not common, there are some providers who do have contribution charges. For example, NEST has a 1.8% contribution charge, so if you wanted to pay £100 into your account with them, it’d cost you £1.80.

We don’t apply a contribution charge. We also only accept transfers from pensions you’re no longer contributing to.

8. Stepped or tiered charges

We mentioned before that the annual management charge and platform charge are types of charges that may often reduce the more you have saved.
This normally works in one of two ways, which can make a difference to the overall charge, so it’s best to check.

Stepped charges

The charge applies to all your money depending upon how much you have invested.

For example, a company has an annual management charge of 0.5% for pension pots worth £10000 or less, and 0.4% for pension pots worth £10000.01 or more.

If someone has a pension worth £5000, their charge would be £25 (£5000 × 0.5%). Alternatively, if they had £12,000, their charge would be £48 (£12000 × 0.4%)

Tiered charges

Your money is split into charging blocks, with each block charged separately based on which price band it’s in.

Using the same example when discussing the stepped charges, if someone has a pension worth £12,000, their charge would be £58. The first £10,000 would be charged within the 0.5% price band (£10000 × 0.5% = £50), while the £2000 over it will fit into the 0.4% price band (£2000 × 0.4% = £8).

9. Other fees

While pension companies are required to tell you what their charges are, they may have other fees which aren’t as easily recognised as others. They may call these charges their ‘account fee’ or their ‘management fee’.

Typically, these charges are in percentage terms, so it’s useful to add all these charges together to find out what your total charging figure is.

Charges and value for money

When comparing charges, it’s important to look at a like-for-like example. If you look at charges on their own, you might get a different view.

For example:

Let’s say Roger has pension pot with 2 different companies:

£10,000 saved with ABC pension company. He’s charged 0.35% which means he pays £35 per year.
£1000 saved with DEF company. And he’s charged 0.5%. This means that he pays £5 per year.

But Roger isn’t getting a better deal at DEF pension company even though he’s paying less. He’s being charged a higher percentage charge. This is why it’s important to look at what would happen if you combined all your money with one provider, which is what the pension consolidation calculator tries to help you with.

If Roger combined these pensions he would have £11,000.

Company ABC would charge him £38.50 a year (£11,000 × 0.35%)
Company DEF would charge him £55 a year (£11,000 × 0.5%))

If this grows over time the difference becomes even bigger.

If Roger had £50,000:

Company ABC would charge him £175 a year (£50,000 × 0.35%)
Company DEF would charge him £250 a year (£50,000 × 0.5%)

As a not-for profit company, this is why we reduce the percentage charge you pay as you save more.

Other providers may also do this at different amounts, so it’s important to check before transferring as it can make a big difference over time.

We hope this helps you understand the types of charges different pension companies offer. If you’d still like to know more, the MoneyHelper website can help you go into further detail.

Impact of fund performance

Charges are of course only one of the things you need to think about when considering whether you’re getting good value for money from your pension scheme.

In our pension consolidation calculator, we assume all companies will invest your money and get exactly the same returns on that investment. This is to show the impact that charges have on how your money grows.

In reality, every pension provider will invest your money differently, and therefore will have a big impact on whether you’re better off keeping your money where it is or consolidating it.

While past performance is no guarantee of future results, if you compare the returns of the fund you’re investing in between one pension company and another, you might get a better picture of which company may be better at investing this money over the long term.

How to check fund performance?

To find out how your money is invested and how well it’s doing, it’s good to ask your pension provider what you’re invested in and to look at the fund factsheet. This is normally a great starting point. This’ll contain information about how your fund is invested and will normally show you how much it’s grown by over different time periods.

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