How to compare pensions when they describe fees in different ways?

McBainUK

How should you compare the running costs of these two pensions which appear to describe their charges in different ways?

Nest

Contribution charge: 1.8%

Annual management charge (AMC) of 0.3%

Aegon - Scottish Equitable Baillie Gifford Balanced Managed (ARC)

Fund Annual Management Charge: 0.25%

Annual Additional Expenses: 0.02%

Total Fund Costs: 0.4%

Representative Annual Platform Charge: 0.29%

dunstonh

They are comparing in the same way.    Its just that NEST has an additional charge of 1.8% of each contribution made.  Annually they are 0.30% compared to Aegon at 0.29%.  

McBainUK

dunstonh said:

They are comparing in the same way.    Its just that NEST has an additional charge of 1.8% of each contribution made.  Annually they are 0.30% compared to Aegon at 0.29%.  

So bascially "Annual management charge" is the same as "Representative Annual Platform Charge"?

dunstonh

McBainUK said:

dunstonh said:

They are comparing in the same way.    Its just that NEST has an additional charge of 1.8% of each contribution made.  Annually they are 0.30% compared to Aegon at 0.29%.  

So bascially "Annual management charge" is the same as "Representative Annual Platform Charge"?

Actually, I am not so sure now.

Initially, I thought that as you have multiple funds on the Aegon one, the representative annual charge was the weighted average of the funds.   However, if this is ARC or Retire Ready, then that could be a platform charge ON TOP OF the fund charges.

Also, the fund charge of 0.25% plus 0.02% TC does not equal 0.40%.  It is 0.27%.  So, why is it saying 0.40%?

So, Nest has an initial charge of 1.8%.  Aegon is nil
Ongoing nest charge is 0.30%
Aegon is either 0.25%+0.29% or 0.40%+0.29% 

Annual Additional Expenses can be disregarded as it is a synthetic figure rather than an explicit charge.  Not all schemes will disclose that figure but it will exist on all.  Whilst platforms disclose it, own brand funds often don't.

McBainUK

Checking the charges page again I can now see I don't have the "ARC" version, so the charges are this:

Aegon - Scottish Equitable Baillie Gifford Balanced Managed

Fund Annual Management Charge: 0.25%

Annual Additional Expenses: 0.02%

Total Fund Costs: 0.15%

Representative Annual Platform Charge: 0.72%

Does this make for an eaiser comparison?

Linton

You arent really comparing like with like.

Nest is a self contained pension scheme designed for small employers in which you have a very limited choice of 6 or so funds. 

Aegon - Scottish Equitable Baillie Gifford Balanced Managed (ARC) is a fund that can be held alongside a wide range of others, possibly from other providers, in a pension scheme.

coyrls

McBainUK said:

Checking the charges page again I can now see I don't have the "ARC" version, so the charges are this:

Aegon - Scottish Equitable Baillie Gifford Balanced Managed

Fund Annual Management Charge: 0.25%

Annual Additional Expenses: 0.02%

Total Fund Costs: 0.15%

Representative Annual Platform Charge: 0.72%

Does this make for an eaiser comparison?

I am a bit confused, as I would expect total fund cost to be 0.25 + 0.02, ie 0.27, so I am not sure where 0.15 comes from.  Perhaps is should be 0.25 + 0.02 + 0.15 = 0.42.  Is the bolding yours or in the original charges page?

McBainUK

coyrls said:

McBainUK said:

Checking the charges page again I can now see I don't have the "ARC" version, so the charges are this:

Aegon - Scottish Equitable Baillie Gifford Balanced Managed

Fund Annual Management Charge: 0.25%

Annual Additional Expenses: 0.02%

Total Fund Costs: 0.15%

Representative Annual Platform Charge: 0.72%

Does this make for an eaiser comparison?

I am a bit confused, as I would expect total fund cost to be 0.25 + 0.02, ie 0.27, so I am not sure where 0.15 comes from.  Perhaps is should be 0.25 + 0.02 + 0.15 = 0.42.  Is the bolding yours or in the original charges page?

The original page is here: https://www.aegon.co.uk/costs-and-charges.html (search for "Scottish Equitable Baillie Gifford Balanced Managed" on the "Aegon and Scottish Equitable Pensions and Bonds" tab.

The bolding is mine, to highlight the difference from my origional post.

coyrls

McBainUK said:

coyrls said:

McBainUK said:

Checking the charges page again I can now see I don't have the "ARC" version, so the charges are this:

Aegon - Scottish Equitable Baillie Gifford Balanced Managed

Fund Annual Management Charge: 0.25%

Annual Additional Expenses: 0.02%

Total Fund Costs: 0.15%

Representative Annual Platform Charge: 0.72%

Does this make for an eaiser comparison?

I am a bit confused, as I would expect total fund cost to be 0.25 + 0.02, ie 0.27, so I am not sure where 0.15 comes from.  Perhaps is should be 0.25 + 0.02 + 0.15 = 0.42.  Is the bolding yours or in the original charges page?

The original page is here: https://www.aegon.co.uk/costs-and-charges.html (search for "Scottish Equitable Baillie Gifford Balanced Managed" on the "Aegon and Scottish Equitable Pensions and Bonds" tab.

The bolding is mine, to highlight the difference from my origional post.

OK, it's explained at https://www.aegon.co.uk/support/faq/Understanding-our-products/charges/qa-targetplan.html.  You are interested in 2 figures, the AMC at 0.25% and the Total Fund Costs at 0.4% (scroll right on the summary line).  The AMC used to be the only figure that had to be disclosed but now other fund costs (the additional 0.15%) must also be disclosed, the problem is this second figure is a bit weird, to the extent that it can sometimes be a negative figure.  I don't know which of these two figures is being used by Nest (the "cleaner" AMC or the AMC+other costs figure), so the comparison is either 0.25% v 0.3% or 0.4% v 0.3%.

There is no 1.8% contribution charge for Aegon but there is an annual platform charge of 0.72%.  I would have thought that Nest also have a platform charge but it's not in the figures you list.

Albermarle

would have thought that Nest also have a platform charge but it's not in the figures you list.

They charge 0.3% as a combined 'all in' platform and fund charge. So pretty cheap, that to some extent offsets the 1.8% contribution charge, as long as you are invested for a few years.

dunstonh

IIRC, Nest do not disclose TC (or additional costs in the same way platforms do).   However, as the TC is a synthetic figure based on one of two calculation methods that can lead to different outcomes and not an explicit charge, it is probably best to ignore it.