Our retirement funds are complex and long-term investments many of us put to one side trusting in the managers to make sure our money works for us.

But many people are unpleasantly surprised when we look at how our chosen retirement funds are performing against wider benchmarks.

One key reason returns may be lower than we expect is that our funds are using record keepers that are taking a slice of the gains.

All 401(k) funds require record keepers, who handle the administration of the funds in question. Tracking investments, processing new employee enrollments, recording participant choices over Roth or traditional IRAs, employer matches, loans and hardships, and statement issuing for example.

Naturally, there is a cost to the fund for this administration that has to be met from the money in the fund – your retirement pot.

However, how record keepers are paid can vary and one method that some funds use is known as revenue sharing which could be leading to less well-performing funds being chosen and held onto in your portfolio.

Record keepers are remunerated in three ways – fees for the actual services provided, fees from investment companies listing their products, and investment fees from their own proprietary funds.

By law. how your fund’s record keeper is paid must be disclosed and of course, they are – in the small print easily overlooked by most people. But even if you do delve into the fine details, enmeshing the different streams of income can be a complex task so many focus on the overall total cost to the fund.

As a result, it can be hard to deduce to what extent your record keeper is motivated by sharing revenue with the third-party menu of funds in your portfolio. Some research has suggested that revenue-sharing funds are more likely to be added to investment options initially and less likely to be removed over time.

And in most retirement funds, the employee bears the full cost of the fund’s record-keeping costs. Larger firms are increasingly resisting the revenue sharing arrangement in their company’s retirement plans but it is still commonplace in smaller businesses, and many smaller companies may well be unaware of the exact arrangements themselves.

Employees are encouraged to review the disclosure documents provided for their 401(k) plans to examine the breakdown of administrative costs being charged to their accounts. Key vocabulary indicating revenue sharing includes ‘fee rebates’ and ‘offsetting fees’. Record-keeping fees are usually a simple percentage of the funds being managed, expressed in basis points, a tenth of one percent. Larger plans could be a simple flat fee.

As a general rule, plan participants receive disclosure statements every year. but if you do not get one, your employer’s human resources department should be able to help or direct you to the record keeper who must provide the information.