Loreen may have won Eurovision 2023 but does she know how much she is paying in pension charges?
A cynic may argue this is not the most pressing issue on her mind at the moment but she will be forty on 16th October this year, so she should be starting to think about the future.
It seems that 82% of Swedes do not know what they pay in charges on their pension savings, according to a survey from Novus on behalf of Alecta (an occupational provider in Sweden) last year.
This research found that women were more likely to be unaware of the pension charges they may be paying, with 87% of women aged 55-65 stating that they do not know what they pay in charges.
Even a 0.5% change in charges can result in a significant difference at retirement.
As an example, a 25-year-old who has a total of 5,000kr, (74.43 GBP) in pension contributions each month and who lowers the fee by 0.5%, can expect to see an additional one million krona more in their pension account after forty years, assuming all other charges remain constant. This equates to about an extra £750,000 in sterling.
This is an extreme example as it covers an individual’s lifetime but it helps to emphasise the point.
As pension charges are taken directly from the fund, by cancellation of units, they can remain hidden – this is the same as pensions in many countries, including the UK.
It is important for all pension scheme members to understand the basics of the costs and charges of their pensions. While these are now more transparent, this survey shows the importance of understanding and challenging costs and charges.
We have been able to assist many businesses reduce their pension costs so please feel free to ask – even a small reduction can have a positive effect for all your employees.