Bid offer spread

F

FintanJ

Registered User
Messages
119
For pension funds, what determines the bid offer prices?

Looking at Zurich, difference is 5%. Does this sound correct?

For valuations provided by the life companies, what price is used ?
 
The pension company decides what bid/offer spread to charge. It is a charge. The most common bid/offer spread for individual policies is 5%. It's important to note that only some policies have any bid/offer spread. Off the top of my head, all new policies being set up now don't have a bid/offer spread, so it only applies to older policies already set up. In the case of Zurich Life, being the example you used, they have some policies with bid/offer spreads and some without so you'd need to know whether the specific policy has one or not and then look at the relevant set of fund prices.
 
Unless it's a really old policy and it's specified in your policy that there is a bid/offer spread, you buy at the bid and sell at the bid.

There's a obligation on the product provider to show both prices, even though the offer one is totally irrelevant to the vast majority of people.

In the context of this particular forum and provider, and let's say it's a Personal Pension, the Policy Certificate will state something like Percentage of Premiums Used to Purchase Units at the Ruling Bid Price: 100.00 %


Gerard

www.prsa.ie
 
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