The warning comes as SIPPs have become a mainstream part of retirement saving in Britain. According to the Birmingham Mail, 5.3 million people now hold a SIPP, with a combined £567 billion invested, based on figures from the Financial Conduct Authority. The products were once associated mainly with wealthier investors but are now used much more widely.
Small Annual Fees Can Build Into Large Differences Over Time
The figures are based on modelling by investment platform InvestEngine, which examined how platform charges could affect pension values over three decades. According to the Express, the calculations assume annual investment growth of 5% before platform fees and factor in inflation of 2%.
For a basic-rate taxpayer beginning with £20,000 and contributing £500 a month, a platform charge of 0.25% a year could reduce the final pension value by around £18,100 after 30 years. If the annual charge rises to 0.45%, the potential difference increases to almost £32,000.
The effect becomes larger in the example involving a higher-rate taxpayer because additional pension tax relief is also taken into account. A saver contributing £500 a month could build a pot worth around £517,286 after 30 years if additional tax relief were claimed and reinvested and no platform fee applied.
If the same saver failed to claim that additional relief while paying a 0.25% platform charge, the model produces a pension pot of about £392,140. The difference between the two scenarios is £125,146. With a 0.45% platform fee, the gap rises to nearly £139,000. The figures are illustrative rather than forecasts of future investment returns, and actual pension outcomes will depend on individual circumstances and investment performance.
Unclaimed Tax Relief Adds Another Risk for Some Savers
Platform charges are only part of the issue highlighted in the analysis. Higher and additional-rate taxpayers can also miss pension tax relief if they do not claim the extra amount available to them.
Basic-rate tax relief is normally added automatically to personal pensions operating under the relief-at-source system. Higher and additional-rate taxpayers, by contrast, may need to claim further relief themselves through a tax return or, in some circumstances, through an adjustment to their tax code.
According to the Express, previous analysis of HMRC data by pensions consultancy LCP estimated that more than 800,000 higher and additional-rate taxpayers could be missing out on as much as £1.46 billion of pension tax relief each year. LCP estimated that the typical higher-rate taxpayer who does not claim could miss around £1,756 annually.
The issue sits within a broader concern about retirement planning. Interactive investor’s 2026 Great British Retirement Survey, based on nearly 8,000 respondents, found that four in 10 retirees did not know whether their retirement savings would last. It also reported that around half of retirees relied on the state pension as their main source of income.
Bob Tronson, head of pensions at InvestEngine, said taking control of a pension involved not only deciding where to invest but also understanding the fees being paid and the tax relief available. He said even small annual charges could cost tens of thousands of pounds over several decades.
