These example illustrations show you the possible impact that costs and charges may have on your pension savings if you stay invested in the scheme.
The Trustee(s) have produced these illustrations in line with February 2018 guidance from the Department for Work & Pensions to help members understand the costs and charges that apply to their pensions savings.
The Trustee(s) chose example scenarios which broadly represent its members, looking at age, current pension savings, the different funds members are invested in and the different charges involved.
When looking at the level of costs and charges met by members we take into account the following;
A charge
This includes the Annual Management Charge (‘AMC’) that is deducted from funds to cover the management costs and additional expenses incurred in running the funds. Together with the AMC this is known as the Total Expense Ratio (‘TER’).
A transaction cost
This includes day-to-day fund expenses incurred within the fund as a result of buying, selling, lending or borrowing of investments. They include explicit costs (such as taxes, fees and commissions) and implicit costs (such as market timing) which are separate from quoted TERs.
The way transaction costs are calculated may mean they are negative, which would reduce the total amount you pay to invest in a fund.
For each scenario, we show how an example person’s pension savings may grow over time if they stay in the Scheme and their pension savings continue to be invested.
We take into account how we expect each fund to grow.
We calculate two figures:
- one figure based on the fund charging to invest and look after your pension savings;
- another figure based on the fund not charging to do this.
When we show figures
When projecting pension savings, we show the value in today’s terms, which means we have already taken into account the impact that inflation may have on the buying power of those pension savings. Some funds may not be expected to grow as much as inflation and so the buying power of those pension savings would be expected to go down over time.
Inflation is assumed to be 2.5% each year and we have assumed that no further contributions will be paid.
Values shown are estimates and are not guaranteed.
The expected growth rates and charges assumed are those set out in the Behind the scenes section.
Below are the different funds and the investment return and charges we’ve assumed in our example scenarios. A list of the funds available in the scheme and their charges can be found in the What funds are available page.
| Fund/Strategy Name | Assumed investment growth above inflation, before charges | Costs and charges borne by members | Why have we used this fund in our examples? |
|---|---|---|---|
| Phoenix Life Traditional With Profits | -1.50% | 0.0024% | Used in the default fund |
| Phoenix Life Unitised With Profits | -0.50% | 0% | Used in the default fund |
| Phoenix Life Managed Fund | 1.50% | 0.1737% | Highest return / standard scheme charge |
| Phoenix Life Cash Deposit | -2.00% | 0.0013% | Lowest return / standard scheme charge |
These figures are based on
- Phoenix Life have been unable to produce SMPI assumptions as at 30 June 2023, as such the Trustees have used the SMPI assumptions as at 30 June 2022, and will continue to work with Phoenix Life to produce updated illustrations.
- Information on charges provided by Phoenix Life up to 30 June 2023.
- Assumptions as to how your pensions savings may grow, which are the same as those used in the annual benefit statements sent to members for 2023.
- Some funds (Traditional With Profit funds) do not explicitly state the charges so we have not been able to incorporate these into the illustrations. However the growth rates used do take into account that investment returns are calculated after any charges have been deducted.
Funds and example scenarios
Read on to find out more about the funds available and their charges as well as look at the impact the charges may have based on some example scenarios.
Investment performance cannot be guaranteed and fund values can go down as well as up. If you are thinking about changing the fund (s) you are invested in, or would like more guidance around the options available to you, we recommend that you seek advice from an Independent Financial Adviser (IFA).