Keep an eye on pension 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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