Who's Taken My Pension?, the Panorama programme to be broadcast tonight claims that workers who paid £120,000 into a particular HSBC pension plan over 40 years would see £99,900 take out by managers (Telegraph).
Below, George Ladds, head of investment and pension research at Fair Investment Company comments on the story.
"As I haven't seen the programme yet, I cannot comment on the full investigation, but the article about the programme in the Telegraph today - Pension firms 'take up to 80 per cent of contributions in fees' certainly sounds shocking. However, people should keep in mind that this 80 per cent is the amount of fees as a percentage of the contributions over the 40 years, not the final pot.
"Whether these fees are fair or not is not for me to say, but what I do know is that this sort of story certainly does not help solve the ongoing pension crisis we have in this country. People are simply not saving enough for retirement, and when they hear things like 'pension companies will take 80% of your contributions' it is certainly not going to endear them to start saving into a pension.
"The main issue here is not how much companies take in fees, but the fact that most young people don't even want to engage with the pensions industry – that's what needs to change.
"I think there needs to be much more Government ownership. The Government needs to restore trust – how many ideas have come in over the past few years and failed? Stakeholder pensions, pension simplification and now auto enrolment – how can people engage with an ever evolving beast?
"The Government also needs to make pension savings interesting and relevant. I would like to see an ISA style pension where clients can access personal savings before retirement for things like a deposit on a house or paying for a wedding. I would however ring fence the tax relief and employer contributions until retirement to stop employees taking advantage.
"There also needs to be more incentive to save – for example, maximum tax relief on all contributions to £30,000. And I think we need to offer younger people additional incentives – I would suggest 40% tax relief for all on contributions under £500 per month, taken at source, for under 30s. If younger people could see that for every £60 they saved they would get £100 back, it might actually encourage them to save for their retirement."