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||Impact on returns|
|Global Investments (up to 85% shares) Fund||-0.004%|
|Global Investments (up to 100% shares) Fund||-0.01%|
|Global Investments (up to 60% shares) Fund||0%|
Projections of the affect of transaction costs and management charge on pot value…
- Projected pension pot values are shown in today’s terms, and don’t need to be reduced further for the effect of future inflation.
- Values are estimates and not guaranteed.
- All assumed growth rates include the effects of inflation.
- Inflation is assumed to be 2.5% each year.
- Starting pot size is assumed to be £1,500 (average pot size of active member of the Scheme was £1,370 at 31 March 2019).
- Contributions are assumed to be £90 gross per month from age 22 and increase each year in line with inflation (average monthly contribution of active member was £87 gross at 31 March 2019).
- The costs and charge considered in these projections include transaction costs and the 0.5% management charge.
- Where transaction costs are negative for example on the Pre-Retirement Fund, these have been treated as zero for the purposes of the projection.
- Any rebates due on the management charge have not been taken into account in the calculation of future projections. Find out more about our charge and rebate.