There are two ways to improve investment returns:
Have a good investment manager
Reduce the charges
Of all the reviews I conduct these are the two biggest issues that people have not even thought about since starting their pension. You don’t have to stick with the investment link you started with (but in my experience most people do) and you don’t need to be locked into a high charging policy.
Fear of ‘penalties’ is one reason people don’t think of moving, but what is the penalty of paying over the odds and have a lousy return.
I have just reviewed a policy where the penalty on moving was 3%. This penalty has kept the funds locked into a poor company with high charges over the last few years. The savings possible were 1% a year on charges. The investment return hasn’t even matched interest rates so a run of the mill fund manager could have beaten this. Just on deposit the funds would have recouped the penalty in less than a year.
