Author Topic: Why pension growth is poor  (Read 2146 times)

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The Prophet

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Why pension growth is poor
« on: November 12, 2011, 09:20:21 am »
The average UK pension fund charges 1.5% of the value of your fund each year.
When you add non-management costs such as dealing fees, the total reduction in fund value due to charges is more like 2.8% each year.

As reported in Money Week, if you put £10,000 in a pension fund in 20 years, assuming 7% growth each year (very unlikely) you will have fund value of £22,770 after charges.
However the total charges deducted will be £15,927 during the period.

In Germany the average management fee is just 0.3%.   In Denmark pension fund manager ATP charges just 0.11%.
ATP is setting up a UK NEST fund charging 0.3% plus a £18 a year administration fee.
They can do this because they have a cheap out of town office and no ridiculous bonus culture - unlike London!