The taxman says three and a half million people are due a refund, but two million will have to fork out for underpaid tax.
Pensions 'not accountable enough'
A watchdog found there is no single body leading the regulation of pension schemes
There is "insufficient accountability" to be able to tell how well some pension schemes are being protected, a public spending watchdog has found.
The National Audit Office (NAO) looked into the regulation of defined contribution (DC) pension schemes, and found around a third of members, and a fifth of schemes, said that they cannot assess whether the charges they pay represent value for money.
The report said the size of final pension pots for members contributing the same amount and experiencing the same stock market performance can vary by an estimated 17%, depending on fees and charges.
The watchdog found there is no single body leading the regulation of schemes and not enough basic information available about the market.
The NAO said it was not possible to tell whether the Pensions Regulator, which regulates all work-based pension schemes, was effective in protecting members' benefits, due to the way it measures its performance.
It highlighted a lack of a "joined-up approach" between the regulator and three other bodies which deal with DC pensions; the Department for Work and Pensions, the Financial Services Authority and the Treasury.
The findings come ahead of the Government's landmark scheme to tackle the pension savings crisis, by automatically enrolling millions of people into workplace pensions, starting this autumn with larger firms.
Amyas Morse, head of the NAO, said: "It is not possible to judge how well the Pensions Regulator is doing to protect the benefits of members of work-based pension schemes.
"This is all the more significant as the trend towards membership of such schemes accelerates. While the regulator's overall approach is sound, its performance measurement system is not strong enough."
Membership of DC pension schemes has increased rapidly in the last decade. The schemes provide a retirement income from a pot of money accumulated by workers during their employment, built up through employee and employer contributions, which are subject to tax relief.
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