To

Pensions Forum

8 March 2001 Ref L/330/067 Circular No. PF 35/01

Stakeholder Pensions: Custodian Fees

Dear Member,

Circular PF 178/00 of 8 December 2000 attached a note from DSS giving further clarification on the Stakeholder Pension Schemes Regulations 2000.

ABI had asked DSS if the element of custodian fees relating to transaction charges met the definition of costs “incurred directly in the sale of securities or property held for the purposes of the scheme” and therefore fell outside the 1% charge limit. DSS replied saying that “if custodian fees are an unavoidable element of the sale or purchase” then they could fall outside the 1% charge.

While ultimately interpretation of the Regulations is a legal matter, after some further discussion on this, DSS have now confirmed (in a letter to AUTIF copied to me) that in their opinion all custodian fees should fall within the 1% charge. This is based on a view that they are essentially management type charges even though they might be based on the number of transactions undertaken.


Yours faithfully


Debra Weekes (Mrs)
Pension Team