Lower fees could add £59,000 to retirement savings, says Vanguard

Vanguard Asset Management has found that cutting investment fees from 1% to 0.5% could leave savers with an extra £59,000 in their pension pot by retirement. 

This followed analysis carried out for the Pension Attention campaign, revealing that a worker earning the UK average salary of £37,500 and paying in £250 a month from age 25 to 66 could end up with £465,000 at retirement if annual fees were 0.5%. 

With a 1% fee, the total would be £406,000, and with a 1.5% fee it would be £355,000 – the figures assume a 6% yearly return.

James Norton, head of retirement and investments at Vanguard Europe, said: “There is a growing concern that many people may not be on track for the retirement they hope for. 

“This is not a new issue, but this year’s Pension Attention campaign is another timely reminder for individuals to assess whether their current saving habits are setting them up for long-term financial security.

“When trying to tackle this issue individuals should focus on what they can control, one of the most practical being the investment costs they pay.”

Norton added: “When buying a car, it’s common for a more expensive vehicle to perform better than a cheaper one. 

“So, you may think that higher fees should lead to better investment outcomes.