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What prevents savers from switching pension providers?

What makes a “good deal”?

According to a recent survey from O2, six in ten Britons believe that a good deal means getting more of a product for their money. Meanwhile, a quarter (25%) of adults argue that receiving additional benefits beyond the initial purchase, such as exclusive offers or third-party services, help them to establish whether a purchase is “good value”.

Evidently, Britons struggle to agree on what makes a product good value. What is clear, however, is that Britons are all keen to secure a good deal – and almost half (48%) of people hate feeling that they’ve missed out on one, according to the aforementioned study.

This is not just the case for domestic products. Many people also adopt this logic when managing their finances, comparing the prices of numerous products, from mortgages to credit cards.

However, many Britons abstain from taking this approach when it comes to their pension.

By not shopping around and comparing pension providers, UK adults risk sticking with a pension scheme that does not suit their specific needs – and this could leave them worse off in the long run.

So, why do so many adults refrain from exploring their different options?

It’s too much hassle…

Many adults are under the false pretence that exploring different pension provider options – not to mention actually switching providers – is incredibly confusing and time consuming. So, many people decide it is easier to keep their pension pot with their existing provider.

This is why My Pension Expert works tirelessly to take on the brunt of the hard work for clients.

After an initial conversation, to understand a client’s financial situation and retirement goals, the team of experts search the retirement finance market, to find a provider to suit a person’s specific needs. It is then up to the individual to decide whether switching providers is the right option for them.

If they decide to switch providers, My Pension Expert also takes on as much paperwork as possible – removing all the hassle from the client. By eliminating the majority of the time-consuming searching and admin, savers should feel empowered to explore different pension options.

It’s too complicated…

Another obstacle preventing people from shopping around for a better pension deal is the confusion caused by various pension products.

The pension industry can be confusing at the best of times. Indeed, recent research from My Pension Expert revealed that 47% of people approaching retirement age (40-67) find researching different retirement finance options to be too complicated a task.

However, the complexities of the market should never prevent someone from finding their ideal pension provider. Those struggling to understand their various pension options would be wise to seek independent financial advice.

Regulated financial advisers will clearly explain the various benefits and drawbacks of different pension providers to their clients. This will help savers to understand exactly how each option will impact their retirement. So, individuals can investigate different providers with confidence.

It’s too expensive…

Finally, many people are reluctant to switch pension providers because they believe it will be too expensive.

It is true that savers can be charged transfer fees when switching providers. These are often applied by the existing provider in the form of an exit fee. This fee will vary for different providers. In some cases, it will be a flat fee. But, in other cases, it could be a percentage of the fund, meaning that those with a bigger pension pot could face higher transfer costs.

Although, it is important to remember that, if switching to a provider which better suits their needs, the transfer fees could be worth it. Further, most charges are taken out of the balance of an individual’s pension pot, which can make the process far less painless.

Naturally, before making a final decision, it is important for savers to understand the terms and conditions and consult a financial adviser where possible. Doing so will ensure that they are not caught out by any surprise costs, should they choose to switch providers.

Ultimately, savers should consider whether their existing pension provider will enable them to achieve their retirement goals. If there are doubts, it may be wise to consult an expert, and explore different options. In some cases, switching may not be the right course of action – but at least savers will be reassured that they are on track to achieve the financially secure retirement they deserve.