Scottish Widows - different series of funds

MoneySavingUser

My workplace pension is an SW GPP.

One of the funds offered within the plan is: https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=G7F34&univ=P

There are 4 different series listed there and SW inform me that my plan is invested in the series 2 funds. I can see that the AMC is higher for series 2 than say series 4 - what other differences are there between the different series?

bigadaj

Nothing really.

MoneySavingUser

bigadaj wrote: »

Nothing really.

So basically Scottish Widows are charging more just because they can?

TrickyDicky101

It's because that's the series your plan was set up to hold. Different series can exist for a variety of reasons - lower charging ones may be offered to investors if their investment is very large (so economies of scale come into play). Alternatively, there may be zero percent series when the series may be held by other funds offered by the provider (these are frequently called 'managed funds') - this is normally used to avoid a double count (eg AMC on top of AMC).

bowlhead99

The different fee scales exist for different products as mentioned above.

You will be on a fee scale negotiated by your employer (or financial adviser, benefits consultant etc) who set up the pension. For example my employer scheme is also SW series 2, their group personal pension product for schemes starting in the last decade and a half. Our rate is 0.65%, which is shown on one of the overview pages when logged into the online account, but the funds we hold are all priced in line with the published values at Trustnet as if they cost 1.00% (like the one you linked to). Every month when I look at my online account unit history, there is a management fee unit rebate, buying us 'free' extra units of the funds we hold based on the difference between 1.00% and the (better) rate we are signed up to. So we have more units for our money to effectively reduce the fee we've borne.

If you were on a stakeholder pension you would be using Series 3 which only offers a restricted subset of the funds. If you were in their individual Retirement Account set up by an IFA, which is effectively a SIPP , you would be on the Series 4 costs. The Series 4 fee rates look good on Trustnet compared to the other ones, but if you were to look at the complete charging structure for that Retirement Account product, you would be paying a service charge of somewhere between 0.15% (for people with millions) and 0.7% (for small accounts) to access it, potentially with extra charges on top for the part of your holdings that were in drawdown.

So yes, you could say SW are charging more for one product over another 'because they can'. They set a rate they think their customers will pay for the products they offer. An alternative answer would be that they charge the amount they want to charge for the product you want them to give you. That's how all businesses operate. If you would like to work with them through an IFA instead of through your employer, then leave your company scheme and give up their ongoing contributions and pay the Series 4 costs and related service charges (and intermediary/adviser charges) yourself. If you would like to be on Series 1, go and find an employer who set up their SW group personal pension before the late 90s.

Breakdown of fund series by policy type
Original Series, sometimes called Series 1

Contracted In Money Purchase commencing on or before 31/07/2000
Executive Personal Pension
Free Standing AVC commencing on or before 31/07/2000
Group AVC commencing on or before 31/07/2000
Group Personal Pension commencing on or before 31/07/2000
Income Drawdown
Individual Personal Pension commencing on or before 31/10/2000
Phased Retirement
Section 32 commencing on or before 31/12/1998
Trustee Investment Bond
Unitised Annuity commencing on or before 09/05/2000

Pension Funds – Series 2

Contracted In Money Purchase commencing after 31/07/2000
Executive Personal Pension (Simplified Charge) commencing after 05/02/2003
Group AVC commencing after 31/07/2000
Group Personal Pension commencing after 31/07/2000
Individual Personal Pension commencing after 31/10/2000
Section 32 commencing after 12/12/2002
Section 32A commencing after 12/12/2002
Unitised Annuity commencing after 09/05/2000

Pension Funds – Series 3

Our Stakeholder pension range of unit linked pension funds

Pension Funds – Series 4

Series 4 units are only for investments into our Retirement Account.

dunstonh

SW charges are on taken via the fund and not the pension itself. So, to cater for different distribution channels and different versions with different charges over the years, they have multiple series.

Series 4 is what a post RDR contract would use as the charges are taken via the pension and not the fund. If you are on a contract prior to RDR then the charges would be taken via the fund and none on the pension.