stakeholder pension dilution

lookingoutmywindow

Hello everyone, first post here so i hope i get it right:o

been informed by Halifax, yesterday, that my s/h pension is being corrected and the unit price of the componant units may be altered, rather than all be the same value . A move to counter dilution they write.

Dilution is a reduction in the value of a fund as a result of dealing costs in the underlying invertments-they write.

I guess the bank is trying to protect itself, but are they raiding s/h funds ?

I understand some unions fight this to protect their members portfolios , if this is a bad thing can s/holders be protected too,in some way?

Finally, if i move my s/h to a diff provider, will i suffer increased costs because of it?

Has anyone else had this letter and are you bothered?
Thanks

dunstonh

I guess the bank is trying to protect itself,

from what? The pension is held in trust and is not administered by the bank. The pension isnt theirs to do as they wish. Dilution doesnt help the bank in any way.

but are they raiding s/h funds ?

ignoring the fact they cant, for what purpose?

I understand some unions fight this to protect their members portfolios

Why would the Unions have any influence?

Finally, if i move my s/h to a diff provider, will i suffer increased costs because of it?

Maybe, maybe not. It depends on whether the pension you transfer to is cheaper or more expensive. Although I think your problem is not understanding what dilution is.

Because each fund is single-priced, when units are linked to a plan, cancelled or switched, the dealing charges incurred buying and selling the property of a fund and any spread between the buying and selling prices of that property can lead to the underlying value of the property being less than the value of the fund, calculated by multiplying the total number of units by the unit price. This is called dilution. To counter the effects of this and in order to preserve equity between planholders, theymay adjust the unit price of units within a fund.