Expenses and charges
What expenses does Zurich have in managing my investment?
Zurich needs to cover the costs involved in looking after your plan and the fund.
Plan expenses are mostly for administration. These include things like receiving and paying out money, answering questions and letters, handling claims, and paying commissions to financial advisers.
Fund expenses are for things like buying and selling investments, paying the companies that manage the investments, and costs linked to properties the fund owns. Any costs fund managers incur when managing external fund holdings are included in the unit prices you see.
How does Zurich take charges from my investment?
We pay for our costs and make a profit by taking charges, as set out in your plan’s terms and conditions. These charges are not the same for every plan, and they may have changed over time. Charges can be taken either from your plan or from the fund itself:
Plan charges
- Sometimes we take a charge from the money you put in, which means you get fewer units when you invest
- We may take a charge each month by cancelling some of your units. This reduces how many units you own
- Alternatively plan charges may be taken in the same way as an annual fund charge, as described in fund charges
Fund charges
- We may take an annual charge, which is a percentage of the fund’s value. This is worked out in the price of each unit, so a small part of the charge is taken every day. This reduces the value of your units
- Some charges are taken straight from the fund and are also included in the unit price. This also reduces the value of your units
- There might be a difference between the buying and selling price of units (called a ‘bid/offer spread’), as explained earlier in unit pricing
The charges for your investment are explained in your plan’s key features and terms and conditions. You can find details in your latest annual statement, or you can call us and we will be happy to help.
Could Zurich change the charges in the future?
We cannot know all the reasons why charges might go up or down in the future.
However, charges could change if:
- The plan’s terms and conditions allow us to use discretion and change charges during your plan
- There are changes to administrative, regulatory or legal requirements we must follow
- The rules for giving financial advice change
- Tax rules change (see ‘Taxation of unit-linked funds’)
- External fund managers increase their charges to us
The costs and charges taken from your plan will affect how much you get back from your investment.
Taxation of unit-linked funds
How are unit-linked funds taxed?
Life insurance companies have to pay tax on the income and gains they make. Because of this, we include an allowance for tax in the pricing of unit-linked funds. Tax is charged to each fund based on its own income and gains and is usually what the fund would pay if it was a separate company. We may take capital losses into account if it is appropriate.
For UK income and gains, tax is charged at the ‘policyholder rate’, which is set by HMRC and can change. Tax rates for income and gains from other countries depend on agreements between the UK and those countries.
Any extra tax on profits is paid by the company. When we work out the value of funds, we use estimates of likely tax, as the exact amount may not be known straight away.
