Annual fund charges/number of funds - is it me who doesn't understand?

Snakey

During a conversation with my pension provider this afternoon:

"Well, obviously Plan A has higher charges than Plan B because you have ten funds in Plan A and only one in Plan B, so of course it's going to cost more."

This sounds like nonsense to me. Surely 1 x £1000 x 1% is the same as 10 x £100 x 1%? Is there something about the way this works that I am missing?

(In case the context would help, I have two pension plans with the same provider, one is from my old employer and the other is from my current one. Both employers have negotiated (different) discounts on the charges, which take the form of rebates consisting of extra units. Rather than keeping two plans I think it makes sense* to move everything to the one with the higher rebate, since it seems that this is the equivalent of lower charges, but first I have to find out which of the two plans that is. Apparently it's not easy to tell, not easy at all...)

* Feel free to critique this logic. I might just be having one of those days.

jem16

Snakey wrote: »

This sounds like nonsense to me. Surely 1 x £1000 x 1% is the same as 10 x £100 x 1%? Is there something about the way this works that I am missing?

Nothing wrong with your logic there. Presumably you just talked to the call centre staff?

Snakey

Yep, got transferred around three of them in total. Got led all around the houses, including an amusing lack of clarity over whether the charges for each of my funds in one plan were being reduced by 0.7% or to 0.7% (the guy swore blind it was the latter. Turned out it was neither, anyway), and a truly amazing moment where I was assured that a reduction of 0.3% was better than a reduction of 0.7%.

At one point I was told that I would need to find a financial adviser to tell me what the situation was. I asked how he'd be able to find out without asking them, and they said "well obviously he'd have to get in touch with us"... gaaaaah, why can't you just tell me then!!

I think I will need to get back to my ex-employer and ask them to confirm what they believe they have negotiated! Whatever it is that's happening, it doesn't match what was in the booklet I was given back in 2011 when our pensions were all transferred to this provider.

It doesn't seem from the website that you can bypass the call centre staff other than by paying for one of their financial advisers.

p.s. The more I mull this over, the more I realise my expectations of this call were too high. I really thought that their staff would understand the question and be able to help. I guess they're more like TalkTalk or similar, then - OK as long as you don't venture off script?

EdSwippet

Snakey wrote: »

... Both employers have negotiated (different) discounts on the charges, which take the form of rebates consisting of extra units.

Been here, done that, bought the t-shirt (albeit across different plans from the same employer, because my employer could not "provide financial advice"!).

If you drill down into your investment/holdings history, do these rebates show up individually in it as regular (monthly?) but non-contribution 'purchases'? If yes, you should be able to compute each fund rebate as a proportion of total holding for that fund. The cheaper plan is the one with the higher rebate proportions.

Snakey

Doesn't look like I can access that information, at least I can't find it in my online account.

What I think I'll do is get one of the financial services guys at work to give them a call - I bet they have a number that can bypass the call centre and get straight through to somebody who'll understand the question.

One step closer... I have a personal target of getting all my investments where I want them before the referendum, so that I can more easily see how much it drops if the vote goes the wrong way!