The investment environment at the moment is tricky at best. Many of the investments that have proved successful in the past are no longer yielding returns. In this context pensions have to be seen as one of the better bets, however everything in the garden is far from rosy.
While there have undoubtedly been some scandals involving mismanagement and fraud in regards to pension funds, the biggest threat to most is more subtle and insidious. Hidden charges and over-inflated fees are chipping away at peoples retirement nest eggs.
Consumers in Britain are hit with very high fees for setting up and administrating pensions. Those in the USA and in fact most other European countries are typically charged much less for this. In addition to the level of fees being high, they are often structured in an overly complicated fashion. The National Association of Pension funds has gone as far as to slam these as being “eye wateringly complex”.
Incredibly some investors have found that anything up to three quarters of there retirement income has been syphoned off through fees and charges. It is those who joined schemes in the nineties that are most likely to be paying over the odds. The charges that are typically levied have fallen dramatically from their hight.
If you find that you are in a pension scheme with unacceptably high charges it may be possible to switch. There are a number of circumstances however where it is more advisable to stick with what you already have rather than changing things up. Some pensions that were sold in the past have the kind of guaranteed returns that are no longer common.
Knowing whether to ‘stick or twist’ with a pension is not an easy call. There are no one-size-fits all answers as there are many, many factors to take into consideration. Paying the premium for high quality financial planning could well be worth it. Not all the information that the best advisors are privilege to is widely available.
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