The concept of retirement planning is still relatively immature in the territory. Some employers, however, do provide their own schemes or provident funds, with some being more generous than others.

Those shopping around for a plan should make sure they fully understand what they are buying. And if they are benefitting from their company's scheme, they should make sure they understand the fundamental points concerning the employer contribution ceiling and the basics of the central provident fund (CPF).

One of the first things to remember is that pension plans tend to offer extremely good returns. But those who look a little deeper will find ''hidden'' costs beneath the surface which a financial adviser may not have fully explained.

The situation is tricky because there are so many schemes to choose from, and the brochures tend to be long and full of financial jargon. Many of them are based in attractive tax-free havens such as Guernsey or Isle of the Man.

But many of these funds are little more than off-shore unit trusts, hiding behind the financial jargon of a pension scheme.

Why the change of terms? Well, once a unit trust becomes a long-term, retirement-like investment, investors will more often than not find an additional layer of management fees and heavy up-front charges.

They do not expect pitfalls such as these and do not ask their fund managers if these ''extra fees'' make pension funds more attractive than regular unit trust funds.

In fact, investors should not dismiss the fact that annualised returns from retirement funds failed to match rises in the Hang Seng index over the past six years.

Worse, annualised returns from retirement funds failed to beat inflation last year and wage inflation over the past four years.

Are these extra fees, leaking into the hands of your fund manager, worth the expense? Those concerned about management fees eating away at investment returns can either opt for the traditional lower-charge unit trust, or go with an even less expensive index-linked fund.

In general, investment trusts are recommended or judged according to their past performance, and investors pay an annual fee of one to two per cent for ''careful fund management''.

But the increasing popularity of index-linked funds is giving investors a real alternative to the more expensive ''managed funds''.

Ada Mak, Fidelity's director of retail marketing for Hong Kong, said index-linked funds were ideal for retirement planning because, while they allowed investors to get into various overseas markets, they tended to be low-risk vehicles for the long term.

''Tracking a particular market gives an investor the opportunity to get direct exposure to the stock market indices, without the need to jump in and out of stocks.

''They are great for long-term retirement investments because they tend to offer low-dealing costs, not to mention the advantage of protecting investments in falling markets or even profit from falling markets,'' Ms Mak said.

Unlike unit trusts, which attempt to outperform the indexes, tracker funds aim to mirror an index, using computer models for direction. Shares are only bought or sold when they go into or fall out of the index, rather than according to the fund manager'sreading of the market.

Because the system is computerised, there is less hassle for the fund manager, thus ensuring the ''management fees'' are lower.

What's more, the actual size of a tracker fund is larger and cost less than traditional funds. Lower management fees certainly make a difference when considering the year-after-year duration of a typical retirement policy.

''Moreover, index trackers should promise a similar rate of growth to the stockmarket, but the possible downside is that if the market falls, you are bound to take a tumble with it. However, because it's a long-term investment, the particular market is sure to rebound,'' Ms Mak said.

So, when comparing various retirement schemes that offer an honest return of about 10 to 12 per cent, people should think twice about whether or not they want to fall victim to 15 years of fund management fees.