Investors are kept in the dark over £3 billion of pension fund costs a year, according to research from SCM Private.
Over 20 years, this non-disclosure of charges wipes around 15% off a person's pension fund.
The research found that there was an average portfolio turnover of 128% each year, meaning a typical holding is kept for just nine months before being sold.
This trend of 'frenetic trading' adds 0.7% in costs each year to the average pension fund, according to the private wealth manager, wiping around 15% off a pension fund's value over 20 years.
Alan Miller, co-founder and chief investment officer at SCM Private, says these hidden dealing costs present a good argument for investing via index funds.
"If we had an efficient, open and transparent savings industry in the UK then maybe people could retire without having to face their later years in comparable poverty. Instead, levels of transparency within the savings industry are shockingly poor both in terms of transparency of fees and transparency of investments," he says.
"The FSA and fund management trade bodies should force or encourage fund managers to reveal either openly or even obliquely to investors the full costs of rampant buying and selling."
UK private investors pay the highest fees in the developed world for actively managed funds, according to data specialist Lipper.
This was written for our sister website, Money Observer.