There are more than 100 varieties of charges incurred in pension scheme investment according to research from the Transparency Task Force (TTF).
The study which examines a plethora of fees claimed a pension can lose up to a third of gains during a lifetime as a result of being hit by these costs, many of which are hidden.
These charges such as transaction costs are typically not disclosed and are in addition to the headline fees.
These include certain elements such as stock lending and interest income which do not show up "anywhere" in the cost chain, said the lobby group. Revenues derived by these activities rarely hit the pension fund assets and are often paid as fees directly to providers.
TTF founding chairman Andy Agathangelou said: "Our findings prove that David Cameron, Tom Tugendhat and others have been absolutely right to suspect that hidden pension scheme costs are a barrier to the consumer getting the value for money they deserve.
"You can't manage what you can't measure so until now those responsible for pension schemes may have been failing to fully protect their members' interests by not managing out costs. Well, from here on they can, because we can provide them with a detailed analysis of where they should look for costs, including hidden costs."
A number of teams in the TTF examined different aspects of fees such as data, stewardship and cost.
Lead of the costs and charges team Dr Chris Sier added: "Policymakers need to understand that hidden pension scheme costs and charges don't just adversely impact incomes at retirement they can also adversely impact incomes during the working years, because pension scheme costs can help to destabilise the financial viability of a business, leading ultimately to the closure of the firm and the loss of jobs. None of us want that."
The group held its first meeting in May 2015 and is dedicated to driving up the levels of transparency in financial services around the world.
What the TTF is calling for
Greater transparency of all pensions and investment costs and charges, so that market forces can work properly, consumers can get the value for money they deserve and their jobs can be better protected
Industry-wide agreement on a consistent set of disclosures around product structure and costs, to aid understanding and comparison
The removal of unrewarded complexity, as an antidote to the obfuscation overload that plagues the pensions and investments sector
All pro-consumer market participants, academics and professional associations to work collaboratively to develop templates that will make data capture on all costs straightforward, easy, efficient, inexpensive and eventually even automated through application-programming interfaces
Regulators to defend the consumer’s interests properly by mandating that all market participants accept a professional duty of care to put the consumers’ interests ahead of their own – just as The Financial Services Consumer Panel and Tom Tugendhat MBE MP have been calling for
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