Mirror Funds

aspy0uk

I have two pension schemes with AEGON, both are "Flexible Personal Pensions". One has lower management charges than the other and I am thinking of combining my money in the scheme with the lower charges. However, my money in the higher charge scheme is invested in a manner that I don't understand. 

I am invested in a number of funds...each of which is replicated twice in the scheme, each variant with a different unit price. As I understand it, this is because, for each fund, my money is split and invested in "the fund" itself and a "mirror fund" version. I don't understand why this is and I don't understand it's implications.

I note that the fund unit prices in the lower fee pension scheme (that I would transfer the money to) are the same unit prices as the mirror fund prices in the more expensive scheme. So if I dissolve Scheme 1 (high charge) to transfer to Scheme 2 (low charge), would I lose something (preferential rates/charges??) by selling out of the fund that is "the fund" (as oppose to a mirror fund)? 

i.e.
Scheme 1 (Management Charge = 0.6%, Rebate = 0.3%...Net Charge = 0.3%):
Fund X Unit Price = 400p (I would lose access to this fund at this price)
Fund Y Unit Price = 565p (I would lose access to this fund at this price)
Fund X Mirror Price = 1450p 
Fund Y Mirror Price = 1275p

Scheme 2(Management Charge = 0.45%, Rebate = 0.25%...Net Charge = 0.2%):
Fund X (Mirror?) Price = 1450p
Fund Y (Mirror?) Price = 1275p   

Given that the higher charge scheme is 10 times the size of the lower charge scheme, this could be a big win or a big loss.

dunstonh

I am invested in a number of funds...each of which is replicated twice in the scheme, each variant with a different unit price. As I understand it, this is because, for each fund, my money is split and invested in "the fund" itself and a "mirror fund" version. I don't understand why this is and I don't understand it's implications.

The old Scot Eq Flexible pension plan had three versions.  Each with its own charging methods.  One had higher charges but a periodic bonus/rebate.  That one could actually work out cheaper over the long term than the one with lower charges.

Nowadays, that type of plan would not be compliant and to be honest, most low cost modern plans beat all three versions.

The important thing is to not look at charges alone but to look at the overall terms.

And for reference, this has nothing to do with mirror funds.   Mirror funds have a specific meaning that doesnt apply here.