Eating Only What You Kill – On Performance-Based Fees in the Pension Fund Industry!

Eating Only What You Kill – On Performance-Based Fees in the Pension Fund Industry!

Fees destroy value.

Rather put bluntly, but maybe a little bit of basic math will help justify the tone. Did you know that for every half-a-percent charge in fees a member’s accumulated retirement savings drop by a fifth by the time they reach retirement age. Put simply, if a member where to retire with $1 million where the annual fees were say 1% of assets, this dramatically drops down to only $800 000 if the fees had been 1.5% of assets instead.

It is no surprise then that the regulator, IPEC, has come out guns blazing on the industry demanding downwards fee reviews. Just to be clear though, this is by no means an endorsement of the approach the regulator has taken in addressing the fees issue.  Suffice to say though that, as part of the key industry stakeholders, we shared our views on the regulator’s expenses draft guideline when it was out for public comment. We would be more than happy to share with anyone what those views on the draft guideline were.  That, of course, is a topic for another day. For the full article click the link below Eating Only What You Kill – On Performance-Based Fees in the Pension Fund Industry