Failure to shop around for pension and annuity deals will deprive some Britons of up to a quarter of the income they could have secured in retirement, forcing them to work longer, a report released on Thursday shows.
With some major pension providers offering fees of just 0.3 percent, employers who capitalise on those rates instead of typical fees of 1.5 percent could boost a saver's retirement income by 17 percent, a report for the National Association of Pension Funds (NAPF) by the Pensions Policy Institute (PPI) finds.
Added to this, the failure of around a third of people to shop around for the best annuity, could be reducing income from a pension by 12 percent, resulting in a two-year extension to working life.
Getting a good deal on charges and annuities can mean the difference between enjoying retirement and spending years more at the desk, said Joanne Segars, NAPF Chief Executive.
The report looked at how decisions made by savers could affect the pension of a median earning male who has a salary of 20,000 pounds per year at the age of 25 and is due to retire in 2055 at the age of 68.
There are seven factors altogether that could triple an average earner's annual retirement income to 7,710 pounds (in 2011 earnings terms) from 2,200 pounds, the report said.
Opting into a pension from the age of 30 instead of 40 could add 990 pounds a year extra, while paying 1 percent more in employee pension contributions would add 780 pounds when coupled with a 1 percent increase in employer contributions.
The full report can be downloaded from the PPI's website at www.pensionspolicyinstitute.org.uk from 0800 GMT on Thursday February 9.
The NAPF recently warned that the toxic UK annuity market is costing half a million retirees each year as much as 1 billion pounds in future pension income.
Savers are not able to shop around for the best deal because one in four had a pension pot of less than 50,000 pounds, and most annuity advisers would not find it profitable to advise on pots of this size.
This effectively shuts savers out of the Open Market Option (OMO) where they can find the best products and rates, the organisation warned.
The Association of British Insurers is currently undertaking work on encouraging shopping around through the OMO.
The NAPF represents 1,200 pension schemes in the UK, with 15 million members and assets of around 800 billion pounds.
(Reporting By Anjuli Davies; Editing by Will Waterman)