• The post you are reporting:
   
  A few points here:
  
  The above is not referring to modern stakeholder or personal pensions, in the former case the charges are capped legally at 1.5% per annum for the first 10 years and 1% of the fund value per annum thereafter. These can be cheaper if you pay a fee for the advice and can be as low as 0.5% p.a. if you really want cheap and use a tracker fund. Many Personal pensions can be just as cheap as that as long as you do not use external fund managers. There is no chance of Stakeholders having charges that approach those quoted.
  
  I suspect that this survey was of old schemes that are no longer being marketed or, pensions such as the one I have chosen for myself rather than go cheap. My own pension is not suitable for anyone with a small fund because charges would cause an unacceptable drag on performance while on a larger fund the increased potential for performance makes it worthwhile.
  
  I note that a lot of the costs are those that pension companies have no control over, such as stamp duty. Passive investment can be used if you want to avoid those costs. The tax raid by Gordon Brown on pensions dwarfs these so called 'hidden charges'.
  
  This research is certainly very flawed.
  
  Fund/Pension management companies, apart from the Key Features they have to provide that demonstrate the effect of charges, quote fund manager charges or AMC as a percentage. A typical one in my pension for instance is 1.5% the so called 'hidden charges' are also quoted as making up the 'Total Expense Ratio' (TER) which can increase the AMC to 1.7% typically, higher for the most actively managed focus funds. I hold 22 funds with various AMCs and TERs in my pension. In the case of my pension I also have a wrapper charge of about £100 per annum and that is it for charges with the wrapper charge falling away to zero when my fund reaches £200,000. It is the wrapper charge (higher on pensions smaller than mine) that is reason smaller pensions should not be in schemes such as mine but in cheap stakeholders.
  
  One further point.
  
  As I have said cheap pensions are available and will always look 'better' in like for like projections at set growth rates than more expensive schemes. But - the pension has to achieve that projected growth for the comparison to be valid. The fact is the quality of the investment management can make a huge difference and that is why I go for a more expensive scheme and I am happy with those charges. Performance matters and i can demonstrate this as follows:
  
  Source: Trustnet - to 19/07/2012
  
  PN Mixed Investment 40%-85% Shares - This is the old Balanced Managed Sector and is where most people tend to invest and funds in this sector can be accessed via cheap stakeholder even at 0.5% AMC - average performance net of charges 10% pa over the last 3 years.
  
  My own pension, same time frame: 14.7% per annum net of fund manager charges. That is 4.7% per annum better but I do have some additional charges to allow for for which I need to outperform by approx. 0.1%, making a net gain of 4.6% p.a. over the cheaper option.
  
  Who wants cheap? Not me.

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