You may well be wondering exactly who is benefiting from your pension savings. After years of carefully putting money aside for your future you could easily find that recent stock market jitters and annuity woes mean you are getting a small fraction of the payout you were expecting.
But it gets worse, because a report has revealed another bunch of people are taking up to a quarter of your money.
Those in the frame are the pension companies. A report from Money Management has found that their charges can easily wipe thousands of pounds from the value of your pension. The most expensive pensions can do even more damage.
The most miserable pension in the report was a Skandia plan, which charges 6.3% when you initially use an adviser to set up the fund, then pays that adviser another 0.5% of the fund every year that the plan is in action.
It calculated that if you invested £200 over 25 years, before the fees your money would be worth £157,494. Once the fees are factored in you are left with just £120,050. That's almost £40,000 just for someone to spend an hour or two setting up your plan in the first place. Because pensions are held for such a long time the effect of the charges is dramatically increased, until in the worst case the cost becomes up to 25% of the value of your pension.
Can you avoid the charges?
To a certain extent it has been possible to dodge the worst of the fees since the introduction of the Stakeholder Pension, which capped fees. Many in the business brought down the fees at that point on all their pensions in order to compete. However, some of the older pensions retained their huge charges.
And there's worrying news from Legal and General which seems to be moving away from the lower charging structure. It announced that the 1% cap on charges will be removed on personal pensions, and charges will revert to whatever their original pension policy stated. In some cases this will be 1.5% - in others it will be far more.
It seems, therefore, that it will be increasingly vital to check out the charges on your policy before signing up for any pension. Because while stellar performance may well be worth it, mediocre performance aligned with high charges over the long term will do incredible damage.