Which PRSA AVC would you recommend ?

[IamHuman]

Hi all,

I'm in occupational pension scheme with my employer where we both contribute 7% of my salary. The scheme is supposed to have 3% return and allows AVCs.

However, I would like to lodge my AVC to a separate PRSA and try investing passively through it using ETFs to get test my idea about investment portfolio (nothing crazy) and get into habit of running same, then scale it up outside of pension vehicle.

I was looking to compare different PRSA providers using the excel sheet from pension authority but it doesn't give all info and it's not presented in user friendly manner I think.

So my question to you is if you can recommend a brooker just for start which would have relatively low running cost (incl. all manual and transactional charges and 100% contribution allocation) and at the same wide range of ETFs to choose from? I would like to start with relatively small AVCs at the moment e.g. €3k or amount to eliminate my income tax at 40%.

Thanks in advance.

 

[ClubMan]

The scheme is supposed to have 3% return

Are you sure that this isn't simply an assumed return in a theoretical projection and, as such, not an actual return? Even if it was an actual return it would be very poor for a pension fund.

to get test my idea about investment portfolio (nothing crazy) and get into habit of running same, then scale it up outside of pension vehicle

To me this is a red flag.
The only idea that really works is to invest in appropriate assets/funds and then leave them alone as far and for as long as possible.
Anybody with a bright new idea for beating the market is most likely going to lose money or miss out on returns achievable through the above approach.

I strongly suspect that you would be better off looking for a regular PRSA provider with low charges and a good selection of investment funds/options.

 

[Persius]

Are you entitled to claim tax relief to contributions to an AVC PRSA if your employer offers you the option of making AVCs to your occupational pension scheme?
The pension authority website doesn't seem to go into this in detail. It may be worth checking the revenue.ie site. I believe there's a tax manual there describing the circumstances under which PRSA contributions get tax relief. AFAIR it's not quite as straight-forward as you might think.

Edit: This was the document I was thinking of: https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-24.pdf
Example 2 (pages 5 and 6) seems to me to imply that you can claim tax relief. I would be interested to hear other's views on this.

 

[IamHuman]

Are you sure that this isn't simply an assumed return in a theoretical projection and, as such, not an actual return? Even if it was an actual return it would be very poor for a pension fund.

To me this is a red flag.
The only idea that really works is to invest in appropriate assets/funds and then leave them alone as far and for as long as possible.
Anybody with a bright new idea for beating the market is most likely going to lose money or miss out on returns achievable through the above approach.

I strongly suspect that you would be better off looking for a regular PRSA provider with low charges and a good selection of investment funds/options.

Thanks for your comment. I actually emailed them asking about the return and they said it's 3% so the way I see this is that the actual retum on this is the fact that my employer is matching my contributions capped at 7%.

I think I didn't clearly expressed what I meant by testing my idea. I'm not interested in beating the market as I'm risk adverse person and I don't think etf would be the way to do it. I want to buy some ETFs and tresury bonds in certain weight with exposure to developed and emerging countries and then rebalance this every quarter. I could see then how do I react to changes in values and whether weights that I've chosen will meet my objectives i.e., modest return in excess of inflation and drop in value not exceeding 20%.

 

[Conan]

If you want to invest AVCs, but not through your main scheme, then you can do a Stand-alone PRSA AVC. There are a number of providers, some of which offer ETF funds.