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%.

Recommended

Should you take a 25% tax-free pension lump sum in instalments?
Pensions

Should you take a 25% tax-free pension lump sum in instalments?

Taking out a 25% tax-free lump sum sounds appealing but it might not be the best way to manage your pension
30 Sep 2022
What changes to the pensions charge cap mean for you
Pensions

What changes to the pensions charge cap mean for you

The government could raise the pensions charge cap – the amount you can be charged in your workplace's default pension fund. Saloni Sardana explains w…
27 Sep 2022
Downsizing or equity release: which is best?
Personal finance

Downsizing or equity release: which is best?

Downsizing – moving to a smaller home in later life – is far cheaper than an equity-release plan. David Prosser crunches the numbers.
13 Sep 2022
How inflation will hit your pension savings
Pensions

How inflation will hit your pension savings

Many pension schemes that offer protection from price rises aren’t as good as they seem, says David Prosser.
5 Sep 2022

Most Popular

The best British tech stocks from a thriving sector
Share tips

The best British tech stocks from a thriving sector

Move over, Silicon Valley. Over the past two decades the UK has become one of the main global hubs for tech start-ups. Matthew Partridge explains why,…
29 Sep 2022
Share tips of the week – 30 September
Share tips

Share tips of the week – 30 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Sep 2022
Why everyone is over-reacting to the mini-Budget
Budget

Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King
29 Sep 2022