Over 8 in ten (82 per cent) Swedes do not know what they pay in fees on their pension savings, while 75 per cent do not know what these fees cover, according to a survey from Novus on behalf of Alecta.

The research found that women were more likely to be unaware of the pension fees they may be paying, with 87 per cent of women aged 55-65 stating that they do not know what they pay in fees.

Intergenerational differences were also highlighted, as the research showed that 90 per cent of 25-35 year olds did not know what they pay in fees.

In addition to this, the research suggested that older people think low fees are more important than younger people, with more than half (53 per cent) of older savers agreeing that low fees are important when choosing a pension administrator.

However, analysis from the Swedish pension fund suggested that even a half a percent change in fees can result in a significant discrepancy at retirement.

For instance, a 25-year-old who has a total of SEK 5,000 in pension payments a month and who lowers the fee by half a percent can expect to see an additional SEK 1m more in their pension account after 40 years, all other things being equal.

This difference would also increase by a further half a million SEK if working life lasted for five more years.

Commenting on the findings, Alecta pension economist, Staffan Ström, stated: “Scarily few know what they are paying in fees for their pension savings even though it can hit their pension hard.

“I think one explanation is that the fee is not charged via invoice but is quietly taken from your pension money. In this way, hundreds of thousands of kroner can disappear without you even noticing.”

In light of this, Ström argued that managers must get better at showing their fees and that savers must get better at finding out what fees they pay, warning that otherwise, there is a risk that reforms in the pension system will largely benefit trustees instead of pension savers.

“Considering that just a 0.5 per cent higher fee can reduce the savings capital by millions, it is something that everyone should look into,” he stated.

“In the end, it's about the return your pension manager achieves landing in your pension envelope and not in the manager's pockets.”

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