InvestEngine Warns UK Pensioners of £125,000 Retirement Loss

Investment platform InvestEngine warned UK pension savers that small oversights regarding platform fees and unclaimed tax relief could significantly reduce retirement funds. Analysis shows a higher-rate taxpayer contributing £500 monthly could see their pot reduced by £125,146 over 30 years if they pay a 0.25% annual platform fee and fail to reinvest additional tax relief. This potential loss rises to £138,948 if the platform fee is 0.45%. For basic-rate taxpayers, a 0.45% fee could result in a pot approximately £31,900 smaller than a fee-free account.

While basic-rate tax relief is added automatically to Self-Invested Personal Pensions (SIPPs), higher and additional-rate taxpayers must manually claim extra relief through tax returns or code adjustments. Pensions consultancy LCP estimates that over 800,000 taxpayers may miss out on up to £1.46 billion annually.

These warnings coincide with a Financial Conduct Authority examination of the SIPP market, which currently consists of 5.3 million holders with £567 billion invested. The regulator is proposing tougher standards for asset handling and consumer protection to safeguard these investments.