TUI AVC Scheme - crippling charges

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auburn

Registered User
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Hi,

My apologies for previous posting - wasn't sure I was still registered with AskAM.

I top up my pension through the TUI AVC scheme brokered by Marsh Ireland and managed by Irish Life.

The charges are crippling:

a 94.5 % allocation rate in conjunction with a 1 per cent (minimum) annual management charge (for index tacking funds) .

What's even more frustrating is that as a TUI member I have no choice but to go through Marsh and Irish Life.

Are these charges in line with other similar sized unions?

Thanks,
Auburn
 
(Suspect that this query should be in Public Sector Pensions.)

If you do a on Askaboutmoney, you'll see that the TUI deal is not alone for high charges for captive market AVCs.

Thankfully, these days you do have choice - you can start an AVC PRSA with a provider and broker of your own choosing. It won't be deducted from salary, so you'll claim your own tax and PRSI relief but you should be able to get better charges than what you quote.

Liam D. Ferguson
www.ferga.com
 
What happens to the existing AVC if you decide to start a PRSA AVC?

What are the typical set up and admin charges?
 
You can either leave the existing AVC fund invested where it is or transfer the fund over to the AVC PRSA.

Charges on an AVC PRSA can be as low as 0% per contribution and 1% annual management charge if you require no advice.
 
That's quite incredible. Let's probe the financial absurdity of this situation a little further.

Teachers, lecturers, nurses etc. all over this country are members of unions. The members pay a sub to its union to act in the best interest of its members. Through some "tendering process", these unions then go and award the AVC business of all its members to a financial intermediary (like Cornmarket, Marsh Ireland etc.) who, between the intermediary and the fund manager, rip off the innocent members by typically pocketing 5 % of all regular and once-off contributions (on top of the 1% annual management charge)!

I don't think I am over reacting when I say that this is a financial scandal. Why? Because these same members could access the same investment funds by taking out a PRSA AVC privately through a discount broker who will set up the scheme with a fund manager on a nil commission basis (e.g. LA Brokers etc.). 100% of the members funds are invested. The discount broker gets a finders fee from the life office based on volume of business pushed through. This is paid from the profits of the life office.

As rightly pointed out, the only major disadvantage is in having to set up a direct debit and pay from net salary and claim your tax relief afterwards.

I really find this quite shocking.

Auburn
 
Auburn, you are dead right. The Unions should be directing their members towards the no commission options freely available. I wonder does Cornmarket etc. buy the Union bosses the odd pint, or maybe even more.
 
I agree completely. As a broker myself, if I had huge captive markets like that, I'd certainly do my utmost to use the buying power to drive down the charges so that people would be getting a better deal by being part of the group than those outside it.

Comparing Cornmarket/Marsh et al to Labrokers isn't quite fair given that Labrokers don't offer any advice while the former do. But then if Labrokers/other discount brokers were guaranteed all the public service AVCs in the country I'm sure they'd be well able to negotiate an extra margin to compensate for advice without passing it on to the consumer.

Slowly, the teachers, nurses, civil service and other public servants are beginning to get the message that they are no longer tied to these monopolies, but still in relatively small numbers.
 
I have existing AVC with Marsh. Can I set up an independent prsa AVC as described, withdraw my funds from Marsh and deposit them in a new AVC and continue contributing. to that AVC.

or

Can i leave my existing AVC fund with Marsh and open another AVC.?

Thanks
 
I recently queried charges that Marsh applied to my AVC contributions. It took TWO months to get a reply. I was told that the charges/fees are explained from the outset. Talk about customer friendly! I am very interested in this whole discussion but somewhat confused by AVC's/Notional Service etc. I work for the HSE and my attempts to obtain information on Notional Service has been stone walled. Thanks to all contributors for opening up this topic.
 
I am absolutely disgusted with Cornmarket. Last week my daughter, who is a teacher, told me a Cornmarket rep was tormenting her to take out an AVC. He is constantly visiting the school and calling her on her mobile. It is pure pressure selling. Thanks to this forum I have advised her not to sign up. I have always been suspicious of Cornmarket. Some years ago when my daughter was young and just qualified, on the advice of her union rep, they sold her a salary protection policy on which I am now seeking further information. If, as I expect, the product is riddled with high charges can it be cancelled without loss?
 
The 1%+ management charge mentioned is taken from the fund or the "profits"?
Thanks
 
Thanks for that. Last question and sorry for barging in!! What's the minimum that one is allowed to pay in to an AVC ?
Thanks again
 
An AVC PRSA can be set up from €10 per month. I'm not sure what minima the Cornmarkets/Marshs of this world impose for salary-deduction AVCs but I suspect they're higher.
 
Also it should be pointed out that Irish Life are a major shareholder in Cornmarket

Bedlam
 
oldtimer said:
I am absolutely disgusted with Cornmarket. Last week my daughter, who is a teacher, told me a Cornmarket rep was tormenting her to take out an AVC. He is constantly visiting the school and calling her on her mobile. It is pure pressure selling. Thanks to this forum I have advised her not to sign up. I have always been suspicious of Cornmarket. Some years ago when my daughter was young and just qualified, on the advice of her union rep, they sold her a salary protection policy on which I am now seeking further information. If, as I expect, the product is riddled with high charges can it be cancelled without loss?
Click to expand...

i wouldnt advise your daughter to cancel her income protection the charge is the same for all teachers young or old and its a % of there salary. so the young teachers make the scheme viable. she can get better value on the avc's if she shops around. She would find it hard to get an income protection policy privately with as much cover for less then the union scheme.and if the worst happened and she had to claim at least she'd have the union to support her if the insurance company started acting up about paying out.

mula
 
mula said:
i wouldnt advise your daughter to cancel her income protection the charge is the same for all teachers young or old and its a % of there salary. so the young teachers make the scheme viable. she can get better value on the avc's if she shops around. She would find it hard to get an income protection policy privately with as much cover for less then the union scheme.and if the worst happened and she had to claim at least she'd have the union to support her if the insurance company started acting up about paying out.

mula
Click to expand...

I would recommend the income protection also as the college will only pay you for the first year of aby illness. If you have along term illness this could be invaluable.
 
As a broker, I would always recommend individual income protection over a group scheme. The main reason for this is that the insurance company get a chance to review the group premium every two to three years. The I.N.T.0. scheme started out at 0.7% of salary and has increased over the years to 2.2% of salary. The ceasing age has reduced from 65 to 60. In an individual plan you get to fix the cost and the benifit to retirement age. This means that the premium is a fixed amount and will actually reduce as a % of salary as your salary goes up over the years, with no premium reviews.
 
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