TOP STORY: DON’T LOSE YOUR PENSION TO HIGH CHARGES

There have been several pieces of research this week around how savers are losing thousands of pounds to high charges they are paying on their pensions. 

New research by People’s Pension has projected that around £1.7 billion will be lost this year due to people switching their pensions to schemes with higher fees or worse benefits.

That’s up £500 million from the £1.2 billion believed to have been lost last year. 

Switching your pensions can be a great thing – for example, many people switch to get lower charges or to put all their pensions in one place, helping to keep track of their retirement savings. 

The issue is that many more people are transferring their pensions now than in the past, but experts are concerned that they aren’t getting any guidance or useful information to help them compare their old vs new pension, meaning they could end up worse off. 

Separate research by Vanguard has found that a saver could be £31,000 better off by age 66 by moving from a scheme charging 1% fees to another charging 0.75%. 

What can you do about this? 

Before transferring your pension to another provider, make sure you double check what your current charges are compared to what you’ll have to pay with your new provider.

You can find this in any documents about your pension, or it should be in your online account. If you aren’t sure, ask your provider – they have to tell you if you ask! 

Aim for charges towards 0.2% – and avoid any that head towards 1%. 

It’s also a good idea to ask your current pension if there are any valuable benefits attached that you could lose by switching. 

Again, ask your provider for help if you aren’t sure. They should explain all your benefits to you. 

TIP OF THE WEEK: HOW TO KEEP MORE OF YOUR PAY WHEN YOU EARN £50K

If you are earning over £50k, you are probably paying more in tax than you need to. Once you earn just over £50k, every pound over that amount is taxed at 40%. 

But you could save yourself thousands of pounds from the taxman by asking your HR department to put some of your earnings over £50k straight into your pension instead of taking it as salary.

This is called ‘salary sacrifice’, but it’s best to think of it as ‘salary swap’. 

The money that goes into your pension isn’t taxed, as pension contributions are tax-free. So you’re keeping every penny for yourself rather than paying it to the taxman.

Your pension payments are also deducted from your salary before it’s taxed, so by putting your salary over £50k into your pension instead, you could bring your actual salary back under the 40% tax threshold.

Watch our full explainer on TikTok:

@antonia_investing

Swap £3k of pay for £3k in pension + about £700 saved on tax if you’re just over the £50k line. Numbers from Interactive Investor, June 2025. Check if your employer allows it and get personal advice if you’re unsure. Figures cited are subject to having available annual allowance for pension contributions and are based on current tax rules, which are subject to change.

♬ original sound – Investing Insiders

FROM THE REGULATOR: FCA CALLS BS ON FIRMS CLAIMING DATA IS ‘LOST’

The finance watchdog has warned it will challenge lenders claiming to have lost customer records about mis-sold car loans to ensure they benefit from an £18 billion compensation pot.

It’s basically called BS on big lenders saying they don’t have data going back to 2007 – when the FCA wants to cover with its compensation pot – so can’t accept claims that far back.

It’s the latest development in an ongoing car finance mis-selling scandal.

What’s the issue? Many people get car finance deals through car dealers. But in the past, some of those people (potentially millions) were not told about commission their dealer was paid, known as a discretionary commission arrangement.

This commission arrangement was where brokers could earn more commission by increasing the interest rate on their customer’s car finance deal.

This may have resulted in the customer paying more for their loan than they needed to so that the broker could pocket the extra cash. Right.

This could have added up to hundreds of pounds in extra costs for the customer.

The watchdog, the FCA, has been looking at opening a compensation scheme dating back to loans agreed in 2007, but many lenders have complained that they don’t have records dating back this far. How convenient!

But the FCA has now said that it won’t accept this as an excuse (go FCA!). So, make sure to put a claim in if you think you may have been affected.

You may be eligible for compensation IF:

  • you took out motor finance before 28 January 2021 (including cars, vans, campervans and motorbikes)  
  • your agreement was either a Personal Contract Purchase or Hire Purchase
  • your vehicle was bought for personal use   
  • your agreement included a discretionary commission arrangement and you weren’t clearly told about it.

Contact your car finance provider in writing to make a complaint – the name will be on any paperwork about your loan agreement if you can’t remember it. 

RATE OF THE WEEK: 7.1% FROM ZOPA BISCUIT

Savings rates are coming down across the board – but Biscuit by Zopa is offering a whopping 7.10% interest on its regular saver. 

The account also allows customers to earn 2% interest on their current account balance, and get 2% cashback on their bills.

Zopa says a typical customer will earn £256 a year in cashback and interest.

The catch? You can only deposit up to £300 a month into the regular saver, but it’s great for people getting started with saving.

DEAL OF THE WEEK: £200 FREE SHARES FROM IG

Investment platform IG is also giving new clients up to £200 worth of free UK shares throughout September if they invest at least £50 in an investment account, Isa or Sipp.

However, the value of shares you receive is up to chance, and you’re most likely to receive between £40 and £50 worth of shares.

The catch: to qualify, you need to hold your investments until at least 31 October.

JARGON BUSTER: FINANCE TERMS EXPLAINED

Discretionary commission arrangement – where a car dealer earns extra commission from a lender for agreeing a higher interest rate on a car finance agreement

Pension fees/charges – a fee charged on your pension for the running of the scheme and managing your investments, usually either a fixed amount or a percentage of your whole pension pot

Finance watchdog – also known as the Financial Conduct Authority – the body that oversees the financial services industry and sets rules firms have to follow

Your Questions Answered

We’re keen to answer any and all of your burning finance questions – drop us a message to info@teamnda.co.uk and we may feature your query with our response in our next newsletter.

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