What charges are applied to my workplace retirement savings on ARC?
We’ve designed Aegon Retirement Choices (ARC) around a clear and transparent, customer-focused charging model. So you’ll see exactly what you’re paying for across all your ARC investments.13 May 2020
Three key charges
There are three main charges that make up your total annual charge:
- service charges - these are to cover the administration costs for your ARC products
- investment charges - these are included in the fund price and are applied by the investment managers. Charges will vary based on the assets you choose to invest in
- personal adviser charge - you’ll only pay this if you have a personal adviser. It's a charge for the advice given to you, and is agreed between you and your financial adviser
Once a year, we'll send you details of the costs and charges you've paid in the last 12 months.
Each workplace savings scheme is individually priced, and you’ll find details of your service charge in your illustration.
The charge is based on the total value of your assets and we’ll deduct it monthly, on or around the first business day of the month, from your cash facility.
Depending on what we’ve agreed with your employer, your service charge may be based on a two or three tier charging structure where your service charge reduces as the value of your ARC account increases. Your illustration will confirm what charging structure you have.
We’ll include the value of any other eligible Aegon pension products you have. For example, if you have an existing Aegon personal pension valued at £100,000, as well as £50,000 of assets held on ARC, we’d calculate the level of your annual charge based on a total fund value of £150,000.
When your fund reaches the service charge cap level agreed with your employer, you'll see a reduction in the overall service charge being paid. This is because you only pay a service charge on any amount below your service charge cap. Take a look at your personal illustration in the document store to see details of the cap and how it works. You need to login to see it.
Some schemes may also have a customer fee applied. This is a fixed monetary amount that will be deducted from your plan each month. This will be deducted proportionately across all assets held on your ARC account, including non-pension investments. This amount won’t increase unless a new scheme price is arranged with your employer.
Your ARC service charge will only apply to your ARC products. It won’t apply to any money you hold elsewhere with us, for example your Aegon Personal Pension or Retiready products.
These charges are for the investment funds you choose to invest in, and are set by the investment managers. These are detailed on the investment list(Opens new window)
You can find an explanation of the charges terminology(Opens new window) on our website.
The charges ‘cap’
The government, specifically the Department for Work and Pensions (DWP) has introduced changes to the charging structure of pension schemes. They have introduced a charge cap for schemes used to meet auto enrolment rules.
The combined cost of your scheme's service charge and the investment charge for the schemes default fund need to comply with the cap of 0.75%. This means that if you stay invested in your scheme’s default fund, and don’t actively select a fund the maximum charge you’ll pay is 0.75%.
If you’ve appointed a financial adviser, you’ll have agreed with them how much you’ll pay for the advice they give you. Adviser charges will be taken as either a percentage or monetary amount from your product wrapper’s cash facility, depending on what you’ve agreed with your financial adviser.
Adviser charges can be set up in three ways:
- Ad hoc
Your adviser can give you more information on each, as part of agreeing their payment structure with you.
We’ll charge £75 a year if you take income from the drawdown part of your Aegon Self-invested Personal Pension (SIPP). This charge will be set up when your first drawdown pension payment is made, and will apply yearly after that to cover ongoing administration.
If you don’t take any drawdown income in the 12 months since your last income drawdown payment, we won’t apply this charge. It will become payable again when you restart taking drawdown income.
If you have more than one drawdown wrapper in your Aegon SIPP, for example, as a result of more than one drawdown to drawdown transfer, you’ll only pay a single £75 yearly charge. We’ll deduct this proportionately across all of the drawdown wrappers you’re taking income from.
A £15 fee will apply to every trade of company equities (sometimes known as company shares) and investment trusts placed through ARC. This fee will apply to any buy or sell, and will be taken from your appropriate product wrapper’s cash facility at the time of the trade.
A £10 fee will apply to every sale or purchase (known as a trade) of exchange-traded funds (ETFs) places through ARC.
If the amount held in an ETF increases or decreases, either as a result of automatic rebalancing or your financial adviser actively changing this, the charge won’t apply. This fee will apply to any full sale or new purchase.
We’ll take it from your cash facility.
Stamp duty will apply to equity and investment trust purchases.
Panel of Takovers and Mergers (PTM) levy
A £1 PTM levy is charged for equity transactions over £10,000. The levy goes to the PTM.
Investment entry and exit charges
Investment entry and exit charges may also apply. Please refer to either your Key information document or Key investor information document and fund factsheet for details.
If you and your financial adviser appoint a discretionary fund manager (DFM), a percentage charge will be applied to the value of the funds held with them. We’ll pay this charge to your DFM on your behalf. This charge will depend on which DFM your financial adviser appoints, and will be taken monthly from your relevant product wrapper’s cash facility. You’ll find details of these charges in your agreement with both your financial adviser and DFM.
While investing through the gross GIA means no tax is deducted from your funds, you may find that some external product providers will apply a charge for investing in their product wrappers. Your financial adviser will be able to provide more information on this.
If you choose to buy a Retiready ISA then this is charged separately. The Charge will be made up of a service charge and an investment charge, and you can find details of these charges on the Retiready website.
Your cash facility
Your investments are held in what we call ‘product wrappers’. You'll need to keep a minimum of 0.25% of the value of each of your product wrappers in your cash facilities to cover charges.
Most charges will be taken from the cash facility of each of your wrappers, however, investment charges aren’t as these are usually included within the fund price. We’ll only deduct investment charges from the cash facility if the investment provider instructs us to. Your adviser will be able to tell you if this applies to any of your investments.
It’s your responsibility to make sure that your cash facilities contain enough money to cover all your charges, as these may be more than 0.25%. If there’s not enough money in your cash facilities to meet any charges we’ll automatically sell some investments, starting with the largest liquid asset.
Changes to charges
We may vary these charges in the future.