The difference a fee makes
The markets have spent the last week waiting for disaster. The euro has stayed strong in the rising expectation that it will soon represent Germany and a couple of other hard currency countries. Gold has crept back over $1,800 an ounce. Political chaos has claimed two political scalps – those of George Papandreou and (fingers crossed) of Silvio Berlusconi. And, of course, equities have gyrated all over the place as they wait to see if a systemic banking crisis is to cause a global depression.
But even as these obvious European nasties loom over us, Britain’s financial industry is quietly under pressure from yet another continental threat – the fees charged by the Danish pension fund industry.
This isn’t as dramatic a matter as the collapse of the eurozone, but over the longer term it has the potential to affect the retirements of millions of Britons in just as extreme a manner. Consider the effect of charges on returns. The average UK fund charges something in the region of 1.5% a year of the value of your assets to take your cash. But that’s not the end of the expense. Add non-management costs – those of trading being the obvious one – and the eventual cost is generally much higher.
• Read the full editor’s letter here: The difference a fee makes.