Is 1.25% a high fee?

Mossy_Da_Dog

My pension fund manager notified me the other day that their fee for managing a balanced equity / bond fund will increase from 1% to 1.25%.

I think a 25% increase is quite high.
In my world, it is, but I'm wondering if this is the norm in pension management circles?

I would be extremely grateful if anyone here could tell me to calm down, pay up and not worry... or whether I should consider moving my (not massively formidable) funds elsewhere.

Thank you.

JTMan

1.25% is a high fee. Fund fees are decreasing in general, that is a shockingly large increase.

dennyk

Hell, 1% is way too high, in my opinion. My own pension's split between a bond index fund and an equity index fund which are 0.13% and 0.12% respectively. I can't see any reason to be paying 1% or more for a "managed" fund unless you're involved in some rather esoteric investment options; few if any managed equity/bond funds outperform passive index funds over the long term. See if your pension provider has some lower-cost index fund options and consider moving to those instead. If they don't, then unless you're getting matching contributions from your employer into this fund that you'd lose out on by moving, you might want to consider getting out and finding a better personal pension or PRSA or something that does.

Corb_lund

Indexed or actively? Any exotic flavours or bog standard?

BailMeOut

Can you transfer to a self managed fund as I am a firm believer in that anyone can manage their own pension? I have been managing my own for about 15 years and it makes you very market aware and it is straightforward with some simple strategies. You can also occasionally pay for a professional advise on your portfolio which would be maybe a few hours a year of fees.

Mossy_Da_Dog

Bog standard

Mossy_Da_Dog

Mmm, yeah ... I actually used to work in finance, but I'd be afraid that I'd screw it up and lose my money.
It seems kind of high risk

dennyk

It's really not difficult to manage your own retirement investments; do a bit of reading on investment strategies, decide on the appropriate asset balance for your risk tolerance, and put your money into a single fund or a combination of funds that provide the desired balance of asset classes. With multiple funds, check your account every so often (once every year or two) and redistribute your investments if necessary to maintain your desired asset balance (since some asset classes will grow more than others over the long term, your actual balances will change a bit over time). That's really all there is to it. Generally the funds you'd want to invest in would be some sort of broad passive index funds which hold a large number of individual equities or bonds and are constructed to be a representation of the overall market (or a particular segment, e.g. all US stocks) and therefore will more or less follow the performance of the market or market segment they represent (market goes up, your fund goes up; market goes down, your fund goes down), so while the value of your investment isn't guaranteed to increase and could decrease, it's unlikely you'd "lose your money" outright barring some catastrophic worldwide economic collapse (in which case you'd likely be just as screwed with some expensive "managed" fund anyway).

Bogleheads is a decent place to start for reading about investing; while some of the details (such as specific fund names or types of tax-advantaged investment accounts) are rather US-centric, the advice about general investment strategies, asset classes, and portfolio construction are universally applicable. The three-fund portfolio approach might be one to consider if your chosen pension provider doesn't offer an all-in-one low-cost target retirement fund or other all-in-one fund. You could also ask for advice on the Askaboutmoney forums or even the Boards.ie Investments and Markets subforum.