What we mean by charges
The charges that come with your pension plan have specific names that you'll see on your annual statement and other documents we might send you. Here we’ll explain what these names mean in a bit more detail.
Fund Management Charge (FMC)
This is the charge we apply to pay for the management of your funds and for the administration of your plan. You may sometimes see it referred to as the Annual Management Charge (AMC). The charge varies depending on the funds you choose to invest in. It is shown as an annual rate. However, we deduct the charge from each fund on a daily basis, which has the effect of reducing its unit price.
Additional Expenses may be deducted from some funds. These are costs of holding assets in the fund. They include items such as custodian, third party administration, trustee, registrar, auditor and regulator fees. Where a fund invests in other underlying funds, they may also include the underlying management charges.
Any Additional Expenses for a fund are shown as an annual rate based on past costs although in practice they are allowed for as they arise in the fund's unit price. These costs can vary over time, sometimes significantly when shown as an annual rate.
All Additional Expenses figures shown are rounded to two decimal places. This means some may show as 0.00% even when there's a small cost.
Total Annual Fund Charge
Adding together the Fund Management Charge and any Additional Expenses gives you the Total Annual Fund Charge. You may receive a discount (sometimes called a "rebate"). Any discount(s) are applied by adding extra units to your pension funds each month.
Fund transaction costs
Transaction costs occur when a fund's manager buys or sells underlying assets in the fund. They do this to try and meet the fund's objective. Transaction costs aren't charges - they're the inevitable costs that happen when buying or selling assets, such as:
- broker commissions
- foreign exchange costs
- stamp duty
It can also include "opportunity costs" based on the timing of a trade in the market. Opportunity costs can be either positive (cost to the fund) or negative (gain to the fund) depending on market movement and timing.
Do all funds have transaction costs?
Fund transaction costs will apply wherever you invest your money, whether it’s in a Pension, ISA or other Investment Product. Our pension plans are no different which is why transaction costs will sometimes be incurred by the fund(s) you invest in.
Transaction costs are already allowed for by the fund manager in the unit price of the fund before our Fund management charge is deducted. Standard Life does not make any money from Fund transaction costs as these are not a charge we take.
How much will my transaction costs be?
We can’t say in advance what Fund transaction costs will be because they depend on how often and when the fund manager decides to buy or sell assets. This in turn depends on market conditions and how the outlook changes for different assets.
However, in order to be as transparent as possible we will start to show you what the amount of Fund transaction costs has been over the last year in your annual statement.