The cost of pensions starts to fall

Costly product charges levied on pensions by many of the UK's top insurance companies may be starting to come down, according to new research.

The drop comes three years after the introduction of rules from the Securities and Investments Board, the City regulator, designed to foster greater competition among insurers. But some companies have resisted cutting charges, according to a study by Money Marketing magazine. Sandra Grandison, who edited the survey, said: "There is evidence costs are beginning to come down."

Research by Money Marketing shows the annual cost of many pensions is reducing. The fall in management costs is called the Reduction In Yield (RIY), expressed as the average percentage amount taken out of a policy each year.

The survey of life insurers' unit-linked investments shows the typical cost of a personal pension for someone aged 60 has tumbled from an RIY of 5.9 per cent to 5.1 per cent.