Investment costs

Your savings in the Sky Pension Plan are subject to investment charges. These vary dependent on the funds that your savings are invested in.

To help you understand what these different charges are and how they work we have provided short explanations of some key elements:

Annual management charge (AMC)

When you invest your savings in a fund, each fund normally has an annual management charge. Annual management charges are reflected in the unit price of the fund or funds that your pension account is invested in. They are paid from your pension account on an annual basis. The annual management charge includes a number of expenses such as administration costs and investment charges, as well as expenses incurred by the fund manager. If a fund is actively managed (the investment manager uses their expertise to select funds which they think will outperform the market or benchmark), the annual management charge is likely to be higher than a passively managed fund. (In a passively managed fund, the investment manager aims to match the market return or benchmark.)

Annual management charges vary from fund to fund and the Trustees work to negotiate favourable annual management charges for the funds available.

Total expense ratio (TER)

The total expense ratio measures the total costs related with managing and operating an investment fund. It is the ratio between the fund’s total costs and the fund’s total assets. The ratio reflects both the annual management charge as well as any additional fund expenses, such as legal and operating costs, incurred by the investment manager.

Transaction costs

When investments are bought and sold, there are usually transaction costs. Any transaction costs will depend on the fund(s) and any trading activity on that day.

The AMC and total transaction costs for the year to 30 June 2020 for the funds available for selection are outlined below:

White label fund name Underlying fund name Total ongoing charges (p.a. %) Transaction costs (%)
Lifestyle funds (also available as Freestyle choices)
Diversified Growth Fund Schroders Diversified Growth Fund 0.41% 0.38%
Passive Global (30:70) Equity Fund BlackRock 30:70 Global Equity Currency Hedged Fund 0.10% 0.07%
Retirement Annuity Fund BlackRock Over 15 Years UK Gilt Index Fund 0.11% -0.04%
Passive Corporate Bond Fund BlackRock Over 15 Years Corporate Bond Index Fund 0.11% 0.15%
Cash Fund BlackRock Cash Fund 0.03% 0.01%
Freestyle funds
Passive Index Linked Fund BlackRock Over 5 year UK Index Linked Gilts Fund 0.09% 0.02%
Passive Global (50:50) Equity Fund BlackRock (50:50) Global Equity Fund 0.10% 0.01%
Passive UK Equity Fund BlackRock UK Equity Index Fund 0.11% 0.01%
Property Fund M&G UK Equity Property Fund 1.19% -0.01%
Active UK Equity Fund M&G UK Equity Recovery Fund 0.67% -
Active Global Equity Fund MFS Global Equity Fund 0.70% 0.12%
Global Climate Change Schroders Climate Change Fund 0.82% 0.33%
Active Global Equity Fund Veritas Global Focus Fund 0.79% 0.82%

Illustration of charges

As required by legislation, we have produced a “£ and pence” illustration of the effect of the costs and charges on the value of the five funds that are used within the default and alternative lifestyle strategies if contributions are paid over a number of years.

The illustration of charges

Example Member Age Schroders Diversified Growth Fund BlackRock 30:70 Global Equity Currency Hedged Fund BlackRock Cash Fund
Before charges After charges Before charges After charges Before charges After charges
Youngest Member 19 £1,000 £1,000 £1,000 £1,000 £1,000 £1,000
24 £9,952 £9,727 £10,220 £10,184 £9,067 £9,057
29 £19,813 £18,951 £20,871 £20,727 £16,561 £16,527
34 £30,674 £28,699 £33,174 £32,830 £23,522 £23,452
39 £42,636 £39,001 £47,387 £46,722 £29,988 £29,873
44 £55,812 £49,889 £63,805 £62,670 £35,995 £35,825
49 £70,325 £61,396 £82,770 £80,977 £41,575 £41,344
54 £86,309 £73,558 £104,678 £101,991 £46,759 £46,460
59 £103,916 £86,411 £129,985 £126,115 £51,574 £51,203
64 £123,308 £99,995 £159,218 £153,806 £56,047 £55,601
65 £127,417 £102,803 £165,588 £159,818 £56,903 £56,441
Typical Member 37 £9,000 £9,000 £9,000 £9,000 £9,000 £9,000
42 £24,354 £23,658 £25,187 £25,075 £21,638 £21,609
47 £41,265 £39,150 £43,885 £43,528 £33,378 £33,298
52 £59,892 £55,523 £65,485 £64,710 £44,284 £44,136
57 £80,409 £72,826 £90,436 £89,026 £54,415 £54,183
62 £103,007 £91,114 £119,258 £116,938 £63,826 £63,498
65 £117,651 £102,582 £138,656 £135,630 £69,148 £68,758


  1. Values shown are estimates and are not guaranteed.
  2. Projected pension pot values are shown in today's terms, and do not need to be reduced further for the effect of future inflation.
  3. Inflation is assumed to be 2.5% each year.
  4. Future contributions are assumed to be paid from assumed age to 65 and increase in line with assumed earnings inflation of 2.5% each year.
  5. Total contribution rates and pensionable salaries are assumed to be 9% and £31,000 respectively for the ‘typical’ member and 9% and £19,000 respectively for the ‘youngest’ member.
  6. The starting pot sizes within the Plan are assumed to be £9,000 for the ‘typical’ member, and £1,000 for the ‘youngest’ member.
  7. Starting ages within the Plan are assumed to be 37 for the ‘typical’ member, and 19 for the ‘youngest’ member.
  8. The projected growth rate for each fund (before total charges and transaction costs are deducted) are as follows.

    Fund Projected growth rate
    Schroders Diversified Growth Fund 1.95% above inflation
    BlackRock 30:70 Global Equity Currency Hedged Fund 2.93% above inflation
    BlackRock Cash Fund 1.49% below inflation
Out-of-market costs

Your money is also likely to be out of the market while the transaction is being made. This means that your investment will not benefit from the rise of markets over this time. However, your assets will not incur any losses either.

Neither the Trustees, nor Buck, nor the underlying investment managers are liable for the risk that the market alters dramatically while your money is out of the market.

To find out which investment charges apply to the funds you are invested in, check out the fund factsheets: