They have released the latest edition of its Pension Transfer Outcomes Index, revealing that pension savers could be losing £1.7bn from their pension pots due to poorly informed transfers made in the year to 30 June 2025 - a 42% increase from the £1.2bn at risk from decisions made in 2023.
The Index, which models the financial impact of transferring pensions into higher-charging schemes, shows that this risk has surged by 120% since 2020. As transfer activity continues to rise, the associated risk is growing at an average rate of 22% per year. Based on current trends, the pension provider now forecasts that uninformed transfers will become a multi-billion-pound problem by 2027 - significantly earlier than its previous estimate of the end of the decade.
Previous research shows pension savers often make pension transfer decisions without fully grasping the financial consequences. With many struggling to find the basic information they need to accurately compare schemes, new research from People’s Pension has found nearly all pension savers (96%) think pension providers should be required to tell people about the impact of the charges they will pay if they transfer a pension to a new provider.
The research also reveals that half of pension savers (53%) don’t really understand how transfers work and a fifth (20%) think they are a gamble. Pension savers lack confidence to make transfer decisions unsupported, with two thirds (65%) saying they need the help of a professional to consolidate a pension.
People’s Pension continues to call for greater collaboration from the pensions industry to enable people to compare their pensions based on the information that matters most. Its five-point-plan includes calls to ban transfer incentives and industry collaboration to create a consumer-facing ‘value for money’ framework, which must be clearly displayed on any future commercial pension dashboards.
Patrick Heath-Lay, CEO, People’s Pension, said: “It’s alarming to see such a rapid escalation of the pension transfers problem, which is fast becoming a crisis, especially when you consider the significant impact on people’s retirement savings. Savers risk ending up with thousands of pounds less and working for years more. And with massive rises in transfer volumes expected when pensions dashboards come into effect, it is essential that the industry acts now to address this issue. Pension savers must be able to easily access and compare all the information they need to make informed, educated transfer decisions. It is therefore vital that simple, easy-to-understand comparisons of value are on commercial pensions dashboards when they launch.
“With the Governments pension review focusing on value only in the workplace pension market and a new commission looking at adequacy of saving, it is appalling to see the amount of value being needlessly lost due to the vulnerability of consumers. More onus must be put on providers to flag to members when they are transferring to higher charging schemes to ensure members understand the long term implications. With so many people under pensioned it is unacceptable for savers to be losing out by making uniformed decisions like this.”
To help pension savers understand the long-term impact of charges and assess the effects of transferring pensions on their retirement savings, it recently launched a Pension Consolidation Calculator. The tool allows pension savers to compare charges across different pensions, see long-term savings projections and understand how small percentage differences in charges can have a large difference on the value of their pension pot at retirement.
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