Banks' mutual fund fees draining pensions, says consumer group

A Danish consumer protection organization warns that fees charged by bank-owned mutual funds reduce pensions.

/ritzau/Lærke Posselt
Photo: /ritzau/Lærke Posselt

Popular mutual funds charge high fees, potentially costing savers several years of pension savings.

This is the message from Danish consumer protection organization Forbrugerrådet Tænk in its campaign aimed at bank-owned mutual funds, according to a report in Danish daily newspaper Politiken.

Forbrugerrådet Tænk discovered that customers typically pay around 1.5 percent of their savings in annual fees to banks and the mutual funds they run.

Politiken reports that as little as 1 percent in annual fees could mean an employee had to work for four extra years in order to pay those fees.

"We are shocked about how much money the individual customer loses on account of high fees," Anja Philip, Chair of Forbrugerrådet Tænk tells Danish news agency Ritzau in the report.

"We simply aren't aware of the need to keep a close eye on these fees," she says.

Philip encourages customers to talk to their banks in order to negotiate a better deal — or simply to move their savings to another mutual fund with lower fees.

The Danish economist Carsten Tangaard, who is the chairman of the Danish government's advisory panel for money and pensions, is surprised so many customers accept the high fees.

"As customers, we don't understand the implications of the high fees we pay for our savings. Around a third of returns on life-long pension savings disappear through these surcharges and fees," he tells Politiken.

Danish banking lobby group Finans Danmark declines to comment on Forbrugerrådet Tænk's calculations before having reviewed them.

The banks, however, do make an effort explain product prices, risks and returns to each customer, according Birgitte Søgaard Holm, Finans Danmark's CEO.

"I can't recognize the portrayal of hiked fees. But, I would like to emphasize that one can't look at expenses alone. It's just as important to review risks and the returns banks deliver to their individual clients," she tells Politiken.

English edit: Daniel Frank Christensen

Frontpage right now

...and more about people

Folksam chief jumps to government-backed agency; Sparebank hires portfolio manager for fund launch, and Dane to lead European business for large US-corporation.

Property still cheap, say partners at DKK 22 billion RE firm

Niels Lorentz Nielsen and John Fisker Bødker -- who have known each other since university -- head up asset manager Core Property Management. In a rare interview with AM's sister site, EjendomsWatch, they talk about the strategy and generational change.

Related articles

amwatch trialbanner.jpg

Latest news


See all

See all

Latest news from FinansWatch (dk)

Latest news from EnergyWatch

Latest news from ShippingWatch