5 Shocking Truths About Your Pension (And Why Blind Trust in Fund Managers Is Costing You Dearly)

Introduction: The Promise in Your Pension Pot

For most of us, a pension is far more than a pot of money - it is the promise of dignity and a secure retirement. It represents decades of hard work, and we traditionally outsource the responsibility for its growth to professional fund managers, confident that their stewardship will deliver prudent, superior performance.

We trust the experts to safeguard our future. The evidence, however, tells a different story. The conventional wisdom that a professional manager is the safest bet for your pension is not just flawed; this misplaced faith is actively eroding your financial future.

Download: The Pension Revolution - Visual Guide to the 5 Shocking Truths

The Great Investments Programme (GIP) represents an alternative model: an evidence-based, transparent, and investor-driven system designed to maximise growth while giving you control. It’s time to look past the marketing and confront the surprising truths about how the system really works.

1. The vast majority of fund managers fail to beat the market.

The idea of a skilled "star manager" who can consistently outperform the market is more marketing myth than reality. The data is clear and overwhelming.

According to the S&P SPIVA Scorecard (2024), over 85% of UK equity fund managers and 90% of global equity funds underperformed their benchmarks over the last ten years.

Even the small handful of managers who do outperform in one period rarely repeat that success in the next.

Statistically, the persistence of so-called "managerial skill" is indistinguishable from random chance.

Instead of relying on a manager's charisma, the GIP dismantles this myth by grounding every investment decision in empirical factors like quality, growth, income, volatility, and specific valuation metrics.

This leads to an unavoidable conclusion about the traditional industry: an industry that captures rent from its clients while delivering index-minus-performance - a triumph of marketing over mathematics.

2. Small fees create a massive drag on your long-term growth

The fees charged by actively managed funds often seem small on paper, but their compounding effect over a lifetime of saving is devastating. Active management typically costs 1–2% per annum.

While that may not sound like much, over a 25-year pension horizon, these fees can erode up to 40% of your potential capital.

To see the power of this difference, consider a direct comparison. While typical fees erode your wealth, a systematic programme of improvement can amplify it.

For example, on a £200,000 portfolio, the Great Investments Programme, even after accounting for its own cost could generate a net benefit of £542,936 over 10 years by delivering a 10% annual improvement compared to the baseline. The small percentages, whether they are costs or gains, add up to life-changing sums over time.

3. Your fund manager is paid for assets, not for performance

A fundamental conflict of interest is built into the core of the traditional fund management industry. Fund managers are typically paid based on Assets Under Management (AUM), not on the investment returns they generate for you.

This model incentivizes inertia, not excellence. The primary business goal becomes accumulating assets and retaining clients to ensure a predictable stream of fee income, regardless of the results delivered.

In contrast, the GIP's model is designed not to accumulate assets, but to deliver "compounding intelligence" giving you the frameworks and tools to manage your own capital. It is fiduciary capitalism without the middleman.

4. Investor behaviour is the biggest threat to long-term returns.

Perhaps the most surprising truth is that we are often our own worst enemies. Studies by respected firms like Dalbar and Vanguard consistently show that the average investor underperforms their own funds by 1.5–2% annually.

This underperformance is caused by impulsive timing decisions—panicking during downturns and selling low, then getting excited during rallies and buying high.

The GIP, by contrast, acts as a "behavioural coach" by integrating feedback loops like drawdown simulators and portfolio stress tests.

These tools show you how temporary losses fit within historical probability, reducing the risk of panic-driven decisions and preventing costly emotional mistakes.

5. The alternative to blind faith is evidence and empowerment

Traditional fund management often operates as a "black box," working behind a curtain of complexity that leaves investors with little genuine understanding or control. You rarely know precisely what you own or why you own it.

The antidote to this is radical transparency. The Great Investments Programme discloses every investment and explains every rationale, transforming investors from passive dependents into informed participants.

It replaces faith in a manager’s subjective judgement with a framework of objective discipline. As the Nobel laureate Daniel Kahneman observed, this shift is critical for sound decision-making:

“Transparency and accountability are the enemies of overconfidence.”

This approach is both a product and a protest, a protest against an industry that monetises ignorance. It is built not on selling a product, but on building investor competence.

Conclusion: From an Act of Faith to an Act of Evidence

The traditional approach to managing your pension is, at its core, an act of faith, faith in an industry whose incentives are misaligned with your own and whose performance record is, statistically, poor.

Investing through the Great Investments Programme is an act of evidence, built on data, discipline, and your own understanding.

The choice is between two philosophies.

One model sells you comfort and leaves you dependent.

The other builds your competence and gives you control. It is a quiet revolution in who controls the future of your retirement.

Is your pension built on a foundation of marketing, or a foundation of mathematics?

Disclaimer: This article is for educational purposes only and does not constitute financial advice, investment advice, or a recommendation to buy or sell any financial product. Past performance is not a reliable indicator of future results. Investments can fall as well as rise, and you may get back less than you invest. Always conduct your own research and seek independent professional advice before making financial decisions. Campaign for a Million provides financial education, not personalised investment advice.

Alpesh Patel OBE

www.campaignforamillion.com