What are transaction costs?
Costs are incurred by investment funds when assets are bought, sold, or lent by the fund. These are called ‘transaction costs’.
Our members’ pension pots will be affected by such costs as these reduce the net investment returns of the funds.
There are various types of transaction costs, eg brokerage fees, stamp duty and custodian fees, foreign exchange levies and bid/offer spreads.
Breakdown of our transaction costs
The transaction costs for each of our investment funds are as follows…
|Investment fund||Management charge||Transaction costs|
|Global Investments (up to 85% shares) Fund||0.5%||0.061%|
|Global Investments (up to 100% shares) Fund||0.5%||0.076%|
|Global Investments (up to 60% shares) Fund||0.5%||0.051%|
Projections for the scheme year ending on 31 March 2020…
As each member has a different amount of savings within the Scheme and the amount of any future investment returns and future costs and charges cannot be known in advance, the Trustee has had to make a number of assumptions about what these might be. The assumptions are explained below:
- Projected pension pot values are shown in today’s terms, and do not need to be reduced further for the effect of future inflation.
- The illustration does not indicate the likely variance and volatility in the possible outcomes from each fund.
- Starting pot size is assumed to be £0.
- Contributions are assumed to be £140 per month from age 22 to 68 and increase each year in line with inflation (2.5%) (average monthly contribution was £138 at 31 March 2020).
- Values are estimates and not guaranteed.
- Costs include transaction costs.
- Charges include the 0.5% management charge and any rebates due on the management charge. The £2.50 annual charge has not been taken into account in the calculation of future projections. Find out more about our member annual management charge.
- Inflation is assumed to be 2.5% per year.
- No allowance for active management has been made.