On You and Yours today they were discussing the charges involved in purchasing a private pension.
Illustrations were given of management charges on a £100,000 fund, over a 25-year:
1% - you would receive back £420,000
2% - you would receive back £330,000
And some management fees are as much as 5%.
But 50% of charges are hidden and it is not a legal obligation that fund managers provide details of these costs - e.g. transaction charges, custody fees (whatever they are), stamp duty, etc. etc. Although the government has recently proposed a cap on the percentage charges, it has not said that other charges must be clearly detailed.
A fund manager who runs a campaign called "True and Fair" said that the FSA was responsible for monitoring this sector but now that responsibility has been handed to the IMA which is a body representing accountants and financial professionals. She questioned whether they are the right people to protect the consumer.
No wonder people are reluctant to invest in pensions.
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