Pension Charges Mis-Selling — Excessive or Undisclosed Fees on Your Pension
Nadeem Pervazis a solicitor at Edward & Amaury Solicitors, a law firm authorised and regulated by the Solicitors Regulation Authority. Content is reviewed for legal accuracy and compliance with FCA guidance and SRA conduct standards.
TL;DR — Quick Summary
- ▸Excessive or undisclosed pension charges can amount to mis-selling — advisers must clearly disclose all costs and ensure they are proportionate.
- ▸Commission (before the 2012 RDR) and ongoing adviser charges that were poorly explained are common grounds for claims.
- ▸Total annual charges above 2–3% per year significantly erode pension savings over time.
- ▸Charge-related claims often arise alongside other grounds — unsuitable advice, DB transfers, SIPP mis-selling.
- ▸We assess the full picture — all charges, all advice — to identify every available ground for a claim.
Pension charges might seem modest as annual percentages, but compounded over years they can take a devastating toll on retirement savings. Where charges were excessive, poorly disclosed, or involved undisclosed commission, there may be grounds for a mis-selling claim. Often, charge-related problems are part of a wider unsuitable advice picture.
Quick Answer
If you were charged excessive or undisclosed fees — or if your adviser received commission that was not properly explained — there may be grounds for a claim. Contact us for a free review of your charges and advice.
Types of Pension Charge That Can Give Rise to a Claim
Initial/upfront adviser charge
A one-off fee — or commission — paid to the adviser when the pension was set up, typically deducted from the fund.
Ongoing adviser charge
An annual percentage of the fund paid to the adviser each year for ongoing advice — reasonable at 0.5–1%, but sometimes higher.
Annual management charge (AMC)
Charged by the pension/fund provider for managing the investment. Often 0.5–1% p.a. for mainstream products.
SIPP operator charge
Charged by the SIPP operator for administering the scheme. Can be a flat fee, a percentage, or both.
Fund dealing/transaction charges
Charged on each trade within the SIPP — can be significant in actively managed or frequently-traded portfolios.
Early exit/surrender charges
Penalties for leaving a product before a specified date — often not adequately explained at the point of sale.
The Impact of High Charges Over Time
The long-term effect of high charges is often underestimated. A pension fund of £100,000 growing at 5% per year over 20 years:
- With total charges of 1% per year: grows to approximately £214,000
- With total charges of 3% per year: grows to approximately £161,000
- The difference — approximately £53,000 — is the cost of the higher charges.
Illustrative only — not a guarantee of any specific outcome.
Commission Before the RDR (Pre-2013 Advice)
Before 31 December 2012, advisers could receive commission from pension providers. This created a conflict of interest: advisers had a financial incentive to recommend products paying higher commission, regardless of whether those products were in the client's best interests. Commission had to be disclosed, but the quality of disclosure varied significantly. If you were advised before 2013 and the commission arrangements were not properly explained, this may support a mis-selling claim.