Platform fee vs fund charge — what's the difference?
Most pension savers focus on one of the two main fees and miss the other entirely. Here's what each charge is, how to find both, and how to calculate your true total cost.
- ▸Every pension has two separate charges: the platform fee (wrapper cost) and the fund charge (OCF/TER). Your total cost is both added together — not just whichever one is advertised.
- ▸Platform fees typically range from 0.15% to 0.75%; fund OCFs range from 0.05% (cheapest trackers) to 1.5%+ (active funds). The fund charge is often the larger of the two.
- ▸For small pots, fund choice has the biggest impact — switching from an active fund at 1% OCF to a tracker at 0.2% saves more than switching platforms. For large pots, the platform fee model dominates.
- ▸Find your OCF on the fund's Key Investor Information Document (KIID) or factsheet — not on your pension statement, where it usually doesn't appear.
Platform (wrapper) fees
The platform fee — sometimes called the AMC (Annual Management Charge) or wrapper fee — is the charge levied by the pension provider for administering your account. It covers the platform infrastructure, regulatory compliance, customer service, and the administrative cost of holding your investments in a pension wrapper.
This is the number most prominently displayed when providers advertise their pensions. It's typically expressed as a percentage of your pot value per year — 0.25%, 0.45%, 0.75% — deducted monthly or quarterly directly from your pot rather than billed separately.
Platform fees come in two structural variants:
Percentage fees scale with your pot. A 0.35% fee on a £50,000 pot costs £175/year; on a £200,000 pot it costs £700/year. This structure is simpler and benefits smaller pots, but becomes increasingly expensive as the pot grows.
Flat or capped fees charge a fixed pound amount regardless of pot size. Interactive Investor charges a flat £5.99/month (about £72/year). Some providers cap a percentage fee: Vanguard charges 0.15% but caps it at £375/year. These structures are dramatically cheaper for large pots — the effective percentage falls as the pot grows.
The platform fee is the number savers most commonly compare when shopping around, but it tells you only half the story.
Fund charges (OCF/TER)
On top of the platform fee, every fund you're invested in charges its own annual fee. This is expressed as the OCF — Ongoing Charges Figure — or sometimes the TER (Total Expense Ratio, an older term now largely superseded by OCF).
The OCF pays for the fund manager, the fund's legal and administrative costs, and the ongoing expense of running the underlying investment portfolio. It is deducted within the fund itself — it reduces the fund's net asset value daily rather than appearing as a line on your statement.
OCF ranges vary considerably:
| Fund type | Typical OCF range |
|---|---|
| Passive global index tracker | 0.05% – 0.25% |
| Passive UK/regional tracker | 0.05% – 0.30% |
| Active equity fund | 0.60% – 1.20% |
| Active bond/mixed fund | 0.50% – 1.00% |
| Active multi-asset fund | 0.75% – 1.50% |
The OCF is almost never shown on a pension statement. You need to look at the fund's Key Investor Information Document (KIID) or the fund factsheet — both are publicly available on the provider's website or on the fund manager's site. Your provider is legally required to include it in their "Cost & Charges Disclosure" document, which is available on request.
Total cost of ownership
The only number that matters for comparing pensions is the total annual cost: platform fee plus fund OCF.
Here are four common real-world combinations in 2025/26:
Combination 1: Mid-market platform + active fund
- Platform: 0.45%
- Fund OCF (active multi-asset): 0.85%
- Total: 1.30%
Combination 2: Mid-market platform + passive tracker
- Platform: 0.45%
- Fund OCF (global index): 0.22%
- Total: 0.67%
Combination 3: Low-cost platform + passive tracker
- Platform: 0.15%
- Fund OCF (global index): 0.22%
- Total: 0.37%
Combination 4: Flat-fee platform + passive tracker (large pot context)
- Platform: £5.99/month on £200,000 pot = 0.036% effective
- Fund OCF (global index): 0.22%
- Total effective: 0.26%
Combinations 1 and 4 represent the outer edges of what's available in the UK market. The difference between them on a £100,000 pot over 20 years at 5% gross growth is approximately £60,000. You can model your specific situation with the pension fee calculator.
The broader guide to pension fees covers how to find your actual total cost figure and what to do if it's higher than these benchmarks.
Which one matters more at small vs large pot sizes
The answer depends on the pot size — but also on what you're in a position to change.
For small pots (under £50,000): The fund choice has the bigger impact because the absolute pound difference between an active fund and a tracker is larger than the difference between most platforms. Switching from a 1% active fund to a 0.2% tracker on a £30,000 pot saves £240/year — more than you'd save switching between most percentage-fee platforms.
For medium pots (£50,000 – £150,000): Both matter roughly equally. The fund choice can save 0.5–1% per year; so can switching from a legacy percentage-fee platform to a modern low-cost provider. This is the range where the total cost comparison is most valuable.
For large pots (over £150,000): The platform fee model dominates. At £200,000, the difference between a 0.45% platform and a £375/year capped platform is £525/year in favour of the flat fee — before considering fund charges. At this scale, platform selection is more impactful than any fund charge difference between comparable passive funds.
One practical implication: if you can only change one thing, change the fund first for small pots (switch active to passive) and the platform first for large pots (switch percentage to flat/capped).
- ▸Under MiFID II regulations, UK pension providers must disclose all costs and charges — including fund OCFs — in a standardised format. The total figure appears in the provider's 'Cost & Charges Disclosure' document. [FCA]
- ▸The Vanguard FTSE Global All Cap Index Fund has an OCF of 0.23% — versus a typical actively managed global equity fund OCF of 0.75–1.20%. The difference compounds to tens of thousands of pounds on a typical pension pot. [Vanguard]
- ▸The FCA caps default workplace pension charges at 0.75% per year — this cap covers the combined total of platform and fund charges, not just one or the other. [FCA]
This is factual information, not financial advice. If you're unsure what's right for your situation, speak to an FCA-regulated financial adviser.