Pension management charges
Every workplace pension scheme charges members for looking after their money. You might hear this called an ‘annual management charge’, ‘management charge’ or ‘AMC’ for short.
Our annual management charge
Members of The People’s Pension will be subject to an annual management charge made up of:
How our rebate works
As part of a not-for-profit organisation, we exist for the benefit of our members and use the money we make to help them save more.
Our charging structure means that typically members will receive a rebate on their management charge of between 0.1% and 0.3% depending on how much is in their pot when the rebate is calculated.
For the part of their savings:
- up to £6,000, no rebate is given
- over £6,000 and up to £10,000, we give back 0.1%
- over £10,000 and up to £25,000, we give back 0.2%
- over £25,000 and up to £50,000, we give back 0.25%
- over £50,000, we give back 0.3%.
This all happens automatically and members will be able to see the rebate in their Online Account and annual statement.
The minimum we can give back as a rebate is 1 pence.
The first rebate will be calculated over a 6-month rebate period from 17 February 2020 to 16 August 2020 and will be applied in August 2020, thereafter it will be calculated monthly.
Good news – at around the time when we take the annual charge, we’ll reduce the initial level of savings that members need to have to qualify for a rebate on the management charge, from £6,000 to £3,000.
If the member takes their money out, future rebates will be worked out on the value of any remaining savings.
If a member receives more than one annual statement from us a year, it could mean they have ended up with two different customer numbers. This means they may pay the annual charge twice, and may not receive their full rebate entitlement. If this has happened, find out how to correct the issue.
Here are some examples…
Neil has saved £3,000 so far
So in a 30-day month, the management charge of 0.5% meant that he paid £1.231.
What will happen as his pot grows
£120 is paid into Neil’s pot each month in contributions. So his pension savings will continue to grow over time.
And once he has over £6,000 is his pot, he’ll effectively receive a reduction on his management charge by way of a rebate, when we next calculate the rebate
Michaela has £14,000 saved so far
So in a 30-day month, the management charge of 0.5% meant that she paid £5.751. Then, at the end of that month, she received a rebate of £0.99. Therefore the charge paid less the rebate was £4.76 for that month.
How her charge rebate is calculated
On the £4,000 between £6,000 and £10,000, we gave back a rebate of 0.1% (£0.33 for that month). And on the £4,000 above £10,000, we gave back a rebate of 0.2% (£0.66 for that month). So this gave her a rebate of £0.99 in total.
As set out above, the first rebate will be calculated over a 6-month rebate period from 17 February 2020 to 16 August 2020 and will be applied in August 2020. During this initial 6-month rebate period, Michaela’s management charge would have been £34.901, and her rebate would have been £5.98 – so the management charge paid less the rebate would have been £28.92 for that 6-month rebate period.
1 Pounds and pence figures are for illustrative purposes only, members may pay slightly more or less than the figures quoted. The management charge examples shown do not incorporate projected unit price or inflation increases during the rebate period. Examples do not include the £2.50 annual charge.
You might be wondering…
Looking for more information?
The Pensions Advisory Service has more information in their ‘Top tips for your pension: Pension scheme charges’.