"How Has Britain's Private Pension System Been Impacted By Administrative Costs?"

More than 40 Percent of Individual Accounts Are Eaten Up by Administrative Costs. An analysis of Britain's private pension system found that a substantial portion of the private accounts are eaten away by administrative costs. "Over a typical career and retirement, the current level of charges in the United Kingdom would reduce the value of an individual account by 43 percent relative to its value with no charges. In other words, more than 40 percent of an individual account's value is dissipated through fees and charges. This figure is based on actual data from financial providers and reflects a comprehensive treatment of costs associated with individual accounts." [Center on Budget and Policy Priorities, "Administrative Costs in Individual Accounts in the United Kingdom," Peter R. Orszag, 3/99]