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Virgin website bases climate change fund fee example on 6% bank rate

Virgin Money is reviewing online literature for its climate change Isa after advisers have claimed it does not set realistic expectations for consumers.

Advisers say the literature does not reflect current expectations about savings rates as the website quotes an example of Bank of England bank rate at 6 per cent, although it is currently at 0.5 per cent.

For Virgin to earn its performance fee, every six months the fund has to increase in value and beat bank rate and a high water mark – the unit price at the start of the six months. Virgin charges 20 per cent of any outperformance above the bank rate and an annual management fee of 1.75 per cent.

The website reads: “Say the Bank of England rate is 6 per cent and we grow the fund by 11 per cent over the six months. That’s 5 per cent outperformance, of which we get 1 per cent and your fund gets 4 per cent. Add back on the Bank of England rate, leaving your fund with 10 per cent growth overall.”

AWD Chase de Vere senior manager Jason Walker says: “A lower rate would be more realistic in the current climate and give a better indication of when Virgin would get a fee.”

A Virgin spokesman says: “We will take a look at this issue raised to see if it is something that we need to add- ress. Interest rates have shif- ted a lot recently and it is not always practical to continuously change literature accordingly.”


A place in the scheme of things

As the company that pioneered scheme pensions for individuals within a Sipp, we were interested to read Andy Bell’s view in Money Marketing that it could be made redundant by future changes to alternatively secured pension rules.

Final analysis

I am a deferred member of a final-salary scheme. I am 52 years old and the normal retirement age is 60. The scheme has been in the news recently as there is a sizeable deficit. Should I worry and what are my options?


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