Keep an eye on pension fees
If you have invested in a private pension, just make sure you aren’t eroding your returns by paying hefty fees.
More and more of us are opting to invest in a private pension and build our own portfolio. Just make sure you aren't eroding your returns by paying hefty fees. Watch out for high fund charges and platform fees that could catch you out and put a serious dent in your retirement plans.
Increasingly, investors are choosing to avoid paying fund managers' salaries by opting for low-cost tracker funds. "Three of the most-bought funds by UK investors last month were trackers," says Kate Palmer in The Times. These funds generally charge 0.1%-0.5% compared with an actively managed fund's 0.75%-1.5%. On a £50,000 investment over ten years that is a difference of £3,250, notes The Times.
Also watch out for platform fees that could make that cheap tracker fund far more expensive. A pension investor with Penfold, for instance, may put their money in the Vanguard LifeStrategy range of funds, which charge 0.22% a year. But this would rise to 0.8% due to Penfold's 0.58% platform fee. A self-invested personal pension (Sipp) with AJ Bell has a typical annual charge of just 0.25%, in which case an investment in a Vanguard fund would cost just 0.47%.
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.
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