Savers who make the wrong pensions decisions could see their retirement incomes slashed by an average of 24%, according to a new report issued today.
A pension with lower management fees could add £630 to a pensioner's income, while shopping around for an annuity can increase it by £850 each year.
To make up for these losses, people will need to continue working into their 70s says the report from the National Association of Pension Funds (NAPF) by the Pensions Policy Institute (PPI).
When taking into account other factors such as paying more into a pension, starting saving earlier and working longer, the report found that the average person's retirement pot could increase to £7,710, from £2,200, by making the right choices.
The NAPF is working with a host of industry leaders, consumer groups, employer bodies and employee groups to try to make pension costs more transparent and to encourage people to shop around when buying an annuity.
"People are not powerless when it comes to their pension. By making the right moves they can get a lot more for their money without having to pay any more in. People who don't get the best out of their pension could end up stuck at work for years longer than they planned. Getting a good deal on charges and annuities can mean the difference between enjoying retirement and spending years more at the desk," says Joanne Segars, chief executive of NAPF.