# Key Post: Self Administered Pension Schemes



## Brendan Burgess

I am a self employed co. director and currently have a co. pension with Irish Life and Permanent.  As I would like more control over my pension investments I am considering opening a share a/c type pension with stockbrokers/life assurance co.  Who offers the best value with these type of pensions?  Will I be able to invest in US Mutual Funds, particularly inverse index funds?


----------



## US

*Self-controlled pension fund*

Can't answer the "best value" question, but I think there are only a couple of firms offering this service, so it shouldn't be too difficult to make the comparison yourself.

As to the US mutual funds, in general a non-"US person" cannot, for US legal reasons, invest in a US mutual fund.  You can, however, invest in exchange-traded funds, which are similar though not identical.  I have no idea what an "inverse index fund" is, so I can't tell you if there's an exchange-traded alternative in which you could invest.


----------



## Liam D Ferguson

*Re: Self-controlled pension fund*

You can set up a small self-administered scheme, appointing your own pensioneer trustee and paying for your own actuarial services as required.  That's the most expensive option, but it gives you complete freedom, within the regulatory framework, to invest where you like, use whatever stockbroker you like etc.  

An alternative is the "quasi-self-administered" arrangement available from some life assurance companies and brokers.  The one I'm familiar with is New Ireland / Davy's.  

Fee to establish at the discretion of the broker.  (5% is the standard charge, but you should be able to negotiate this.) 
1% charge to New Ireland for setting it up. (Waived if the fund is over €127,000)
Normal Davy's dealing charges.  
Ongoing administration charge of 0.5% per annum to New Ireland and 0.5% to Davy's. 

Of course, this arrangement ties you to Davy's services.  

Liam D Ferguson
www.ferga.com


----------



## MyAdviser

*Re: Self-controlled pension fund*

CHICHI, one suggestion would be to weigh up the additional cost associated with the extra control you are looking for. 

My experience is that most clients want the control in order to achieve a higher return. If this is the case with you think long and hard before you act. 

There is no relationship between control and higher returns, if anything you could be  effectively taking higher risk, increasing your costs and ending up with a smaller pension fund. 

A rule of thumb is that you would need to be contributing about 25k - 30k EUR each year to justify the extra cost of a small self administered pension scheme (SSAPS). Liam has already covered the kind of cost associated with the quasi-SSAPS.

These days you can have your existing pension and future contributions converted to a nil commission structure and have no entry costs (depending on the regular contribution), a low monthly policy fee of 3-4 EUR and 0.75% management charge. You would not have as much control as a SSAPS but you can choose from over 20 different funds. The fee for such a move is about 200 EUR.

I hope this helps.

Regards Michael

Authorised Advisor
www.myadviser.ie


----------



## Chichi

*Self-controlled pensions*

"Inverse Index Fund" is a fund which moves in the opposite direction to the market, effectively another way of shorting the market.
I have heard recently of E.T.F.'s but am not sure if they can be used to gain from a falling market.

Your comments would be appreciated.


----------



## SFAG

*bcp*

Do a share dealing pension. farily simple and not too dear. 5% of your cash going in and 1% per year after that. You buy and sell to the cows come home. You can short sell too if you fib a bit and buy within the couple of weeks they give you to cough up.


----------



## Aidanmcloughlin

*Self-controlled pensions*

As a Pensioneer Trustee (and current chairman of the Association of Pensioneer Trustees) it might be useful to dispel some myths about self-controlled schemes.

Firstly, there is a choice of almost 50 different service providers to choose from.

Secondly, the manner in which the different providers charge and the services provided do vary. It is possible to find a service and price to suit most people's needs.

Thirdly, the question of costs is frequently a red herring. My own company has compared Total Costs on a contribution level of £10,000 per annum over 10 years with all the major players in the Insurance Market. The Total Costs associated with the self-controlled scheme came in at less than the Total Costs of the cheapest insured product.

In practice I believe every company director should have a Self Controlled Sheme to ensure value for money, transparency and choice.


----------



## darag

*Re: Self-controlled pensions*

Hi Aidan,
  would you mind telling us which of the
self controlled schemes offered good value?
What levels of entry charges and 
management charges could you expect to
pay?  Or are the charging structures 
generally more complex?

Thanks.


----------



## US

*Self-controlled pensions*

Hi darag

I'm not Aidan, but I can point out that the answer to your question is not necessarily straightforward.

The whole point of a self-controlled pension scheme is that you can invest in anything you want, and the costs you pay will depend on what you invest in.  Your fee to the scheme trustee/administrator may be unchanging, but if you invest in (say) equities you will also pay commission at whatever rates are imposed by the stockbroker used, if you invest in mutual funds you will pay the entry and annual charges embedded in the mutual funds, if you invest in property you will pay the costs associated with that, and so forth.


----------



## darag

*Re: Self-controlled pensions*

Hi US,

Yes that makes sense.  

But I'm not too  worried about the unavoidable 
costs that you mention - stockbrokers' fees, 
mutual fund management charges, etc.  If I 
were investing "normally" (i.e. not saving for a
pension), I would have to pay these charges
anyway.   Also there are ways to minimise them
by keeping down the number of transactions if 
buying shares for example.

I guess I'm interested in how much is charged 
(and is pocketed) by the trustee.  It seems like 
such a minimal service that it should be relatively 
cheap.  I'm thinking that you could get a pretty 
good value pension by purchasing blocks of ETFs 
or similar every couple of months through one of
these vehicles.

Thanks.


----------



## US

*Self-controlled scheme*

Hi darag

I think in today's regulatory climate it's very far from being a "minimal service", but no doubt Aidan will be along before too long to speak on this with the benefit of more experience than I have.  Much of the trustee's time is taken up with ensuring that the Revenue Commissioners are kept happy, which costs money even though it doesn't necessarily translate into value for the client in terms of a higher pension fund.

If you are sure that you want to confine your scheme to the purchase of publicly-traded securities (like ETFs) many of the Revenue's more outlandish concerns would disappear, and the trustee's burden might be lightened.  On that basis you might be able to get better terms, but it would be for negotiation.


----------



## MyAdviser

*Re: Self-controlled scheme*

Aidan, would it be possible to see the assumptions made that underpin - 

*"The Total Costs associated with the self-controlled scheme came in at less than the Total Costs of the cheapest insured product."*

I am happy to re-direct clients to such schemes for those who want the extra investment control and such a cost advantage would open them up to a wider audience. So far the checks that I have made would lead me to believe that you need to be a significant investor (approx 30k EUR per annum) to make them in any way cost effective and that would be compared to a 5%-6% flat commission structure.

I sell discounted insured based pensions and here are two examples of the typical costs for a 10k EUR lump sum;

*Hibernian Life*
Entry Cost = 0.5%, Set Up = 44.44 Eur fixed, and annual management charge of 0.75%.

*Scottish Provident*
Entry Bonus = 0.23%, Set Up = 0.00 Eur fixed, and annual management charge of 1.00%.

Both providers have a very wide range of funds and the MyAdviser once off fee on top of the above costs amounts to 100 EUR for Transaction Only and 400 EUR if you need full advice.


Regards

Michael

Authorised Advisor & Discount Broker
www.myadviser.ie


----------



## aidanmcloughlin

*self controlled pensions*

Hi Darag,

Apologies for not responding sooner.

I would prefer not to advocate the services of one Pensioneer Trustee over another.

What I would say on the question of costs is that the charging structure generally includes:
 1. a set-up fee and
 2. an annual management fee

Some Pensioneer Trustees are linked to specific investment options or providers and therefore their costs may be an amalgamation of administration costs and investment costs.

Because of the variety of different ways in which Pensioneer Trustees operate the set-up fee can range from€2,000 to €6,000. These fees are, for example, influenced by the range of ancillary services provided and the types of investment effected, their scale and complexity.

Annual administration fees tend to be expressed as a proportion of the fund and would average 0.5%. With some providers additional administration costs may be incurred in respect of actuarial fees, auditors fees etc. With others these will be included in the fee quoted.

As US has pointed out, additional costs can be incurred in respect of investments. However, as you have pointed out such costs are inherent in the making of any investment. (I will reply separately to Michael on the issue of costs). However, a key element to a self controlled scheme is the issue of costs. Because costs are transparent and self controlled you can add value to your fund immediately. For example, dealing costs can vary significantly between stockbrokers. Depending on the stocks invested in and the volume of investment activity significant savings can be achieved.

Similarly, with property investment, the legal fees and other costs can be factored into the investment decision (and controlled with a bit of haggling!)

 I hope this is of help to you.

Aidan


----------



## aidanmcloughlin

*Self Controlled Pension Schemes*

Hi Michael,

In relation to the question of costs of insured versus self controlled pensions it is useful to outline some general background points.

The assets of unit-linked funds form part of the overall assets of the insurance company. As a consequence the costs of an individual fund are not separately audited. Therefore arriving at the true costs require a certain amount of detective work.

In much of the rest of Europe (and the US) pooled investments are effected through unit trusts, Open ended investment companies or mutual fund. A key distinction with these structures are that the individual funds are audited. From the audited accounts it is possible to discern a figure known internationally as the Total Expense Ratio (TER).

International studies of thousands of investment funds suggest that most funds have a TER of the order of 2.5% to 3.5% per annum. It would appear that funds with the lowest declared management fees do not necessarily have the lowest TERs.

It is worth noting that even the TER does not include dealing costs as these are generally netted of against profits before inclusion in the accounts. Thus actively traded funds could have significantly higher dealing costs.

There is nothing about the structure or practices of the Irish unit-linked funds to suggest they would be cheaper. Indeed in one infamous example of a unit-trust launched by an Irish Institution (which mirrored a range of unit-linked funds) the TER came to 12%.

Clearly, it is possible for unit-linked managers to charge a whole range of costs to the fund in addition to their management fee. However it is also possible for such managers to indirectly increase the cost of entry and exit through the movement of the bid/offer spread. Take for example a €10,000 investment in fund A which wishes to switch to fund bid. The fund manager allows bid to bid switching at a cost of €10. We will assume the "true" bid price of each fun is €1 therefore you would assume that the new fund value will be €9,990 after the switch. If the actuary moves the bid-price of the departing fund downward and the receiving fund upward s/he can achieve a "margin" of 5% or more on the transaction. This can result in a true switching cost of the order of €60 or more - a 600% increase on the declared costs.

Some appreciation of the true charges of insurers can be gleaned from the insurance industry "blue book". The total expenses of the various insurers can be measured as a proportion of total premium income. Note that this doesn't include dealing costs or the insurers profit margin.

In summary, in comparing unit-linked funds with other more transparent vehicles care needs to be taken in just using the declared fees approach.

I trust this is of some assistance.

Aidan


----------



## MyAdviser

*Re: Self Controlled Pension Schemes*

Aidan, thank you for that and I want to think about what you have raised and come back later. In the meantime you mentioned a cost assessment that you did which showed that for a 10,000 EUR contribution level SSAPS come in very cost competitive. Do you have the specifics of that study?

My feeling is the costs of 2,000 EUR - 6,000 EUR set up and 0.5% on going cost (before any fund or dealing costs) look like it would take a lot of funny business (moving bid prices against a customer who switches or some how just adding in extra cost before the fund growth is set and the actual declared management charges is deducted) to make up for these costs. But maybe I am wrong.

Regards Michael

Authorised Advisor & Discount Broker
www.myadviser.ie


----------



## Monet

*SSAP*

Aidan,
An insured scheme using a stockbroker account overcomes this transparency issue. The account is valued by the stockbroker on a quarterly basis. This value is calculated as stock value less stockbroker fee less a defined fund management fee (usually 0.5%), ie full transparency. 

In my experience many SSAPS have a significant  investment in unitised funds therefore exposing them to the same fund management issues you have highlighted.

So the issue of unitised fund management costs is not in itself a  reason for deciding between an SSAP or a self directed insured scheme.


----------



## aidanmcloughlin

*self controlled pensions*

Michael,

I have the underlying figures on a spreadsheet. If you e-mail me at aidan@independent-trustee.com I will forward the figures to you.

Aidan


----------



## aidanmcloughlin

*self controlled pensions*

Hi monet,

Your comment on a pension wrapper invested with a stockbroker is correct. The structure is more transparent that ordinary insured pensions and that is one of their attractions.

 Similar benefits are available from pension wrappers which provide specific property investments. As the performance charachteristics of the underlying investment are known there is less potential for hidden charges.

In relation to the comment on unitised investments I would suggest that such structures are not getting the full benefit of being self controlled. However it is still logical to use unitised investments in a self controlled fund as, for example, a tool for diversification or whilst accumulating a fund for property investment.

The advantages to a self controlled pension scheme are not driven solely by costs. I dealt with the issue of costs because it was suggested that this might be a reason for someone not doing a scheme; I was simply ensuring that all costs were brought into the decision process.

Equally in assessing a pension wrapped around a stockbroker versus a self controlled fund it is useful to consider the costs of the stockbroker as well. In addition to having funds invested through all the Irish stockbrokers we also have funds that are utilising UK and US brokers. This is based on our clients own research on issues such as cost. With some stockbrokers dealing overseas I believe you may have to incur their own costs and those of a broker based in the overseas market.

A further advantage of the self controlled pension fund is the ability to use a variety of different investment media including 1 or more stockbrokers, unitised investments and direct property investment. Where someone has elected for self control it seems inappropriate to utilise a structure which places artificial limits on the exercise of their control. The investment term can be lengthy and the structure should facilitate the widest possible choice for current and future planning.  

Regards,

Aidan


----------



## Monet

*Self Controlled / Self Directed Pensions*

"A further advantage of the self controlled pension fund is the ability to use a variety of different investment media including 1 or more stockbrokers, unitised investments and direct property investment. "

There is no doubt that a small number of professional investor will look for the degree of investment sophistication you outline, ie. the ability to use low cost online US  investment brokerages etc. But surely this is rarefied territory and most self controlled investors will use stockbrokers well known to them who they can put a face on. I'm not sure what the reference to different investment media refers to. Most Irish stockbrokers offer a very broad range of sophisticated investment instruments. 

I also have some reservations with the basic principal of investing in a specific property through a self controlled pension fund. My concern would be that the key attraction of investing in property, gearing, is lost. It seems a preferable approach would be a pension backed property investment mortgage. You gain personal ownership of the property, effectively tax free rental income to cover interest payments and the full benefits of geared investment returns.

Regards

Monet


----------



## aidanmcloughlin

*self controlled pensions*

Hi Monet,

The significance of using discount stockbrokers is it allows the client to control costs all the way down the line. In an era of reduced stockmarket returns this can be significant.

Not all clients in self controlled funds would seekto use discount stockbrokers or indeed any stockbrokers. The advantage of having an independent trust is to have the right to access ant provider you want - when you do decide to invest.

Clearly many people are interested in property investment when they set up self controlled funds - approximately half the funds I am involved with have property in them. It is an area where ordinary investors feel they can compete or a good footing.

The issue of gearing is not prohibitive as you suggest. Self controlled schemes can access a range of opportunities which will permit property investment with gearing.

This does not exclude your pension mortgage suggestion. It could be used in conjunction with the self controlled trust.

Aidan


----------



## Monet

*self controlled pensions*

Aidan

I must plead some degree of ignorance on these geared property investments that are approved by the Revenue.

Maybe you are referring to companies that are set up to take on the property borrowing and the investor buys shares in that company. If so, surely this is not exclusive to self controlled schemes as I imagine a self directed can buy these shares in the same manner via a stockbroker.


----------



## aidanmcloughlin

*self controlled pensions*

Hi monet,

The manner in which gearing can be included in pension funds varies. In principle it involves an investment in shares or in unitised funds. The ability of the stockbroker to replicate this will depend on:
1. The underlying investment being within the investment mandate between the stockbroker and the wrapper provider
2.


----------



## aidanmcloughlin

*self controlled pensions*

Hi monet,

The manner in which gearing can be included in pension funds varies. In principle it involves an investment in shares or in unitised funds. The ability of the stockbroker to replicate this will depend on:
1. The underlying investment being within the investment mandate between the stockbroker and the wrapper provider
2. The investment being available to the stockbroker i.e. it may be of restricted circulation
3. The willingness of the stockbroker to facilitate this. (As a property based investment is unlikely to be traded often the ability of the stockbroker to earn trading fees is severely restricted)

I hope this comments are of use.

Regards,

Aidan


----------



## Noah

*Gearing*

Aidan, can you set one which invests in a private property company with gearing? Can the investor own shares in that company?


----------



## Calling Aidan

*Above*

Can you comment on the last post. It sounds very interesting


----------



## aidanmcloughlin

*self controlled pensions*

Apologies for the delay in replying.

"can you set one which invests in a private property company with gearing?" 

Assuming the "one" referred to is a self controlled trust the answer is yes.

"Can the investor own shares in that company?"

I asume the question is whether an individual who is the principal beneficiary under a self controlled pension trust can also participate in a personal capacity in the same investment vehicle. In theory the answer is yes in that this is not specifically prohibited by the Revenue Commissioners. In practice such an arrangement would create significant practical difficulties. All Pension Schemes are entitled to the various tax reliefs applicable on the basis that the scheme is established for the "sole purpose" of providing relevant benefits. This "sole purpose" test is extremely wide and is the basis, for example, of the Revenue ban on the marketing of Pension Schemes and Pension mortgages jointly. In practice therefore, even if the investment is legitimate, it could be extremely difficult to establish this to the satisfaction of the Revenue. I believe this kind of situation is best avoided. 

I trust this is of benefit.

Regards,

Aidan


----------



## garrettod

*Borrowing within a Self Admin Pension Scheme*

Hi

A couple of quick questions regarding the recently approved ability to borrow within a Self Admin Pension Scheme, if I may:

- Whats the standard level of debt available for these ? ... best I've seen is 70% LTV on a property (with ability to generate income)

- What kind of costs are associated with the above, are the Banks charging you more, given it's non-recourse lending ?

- Whats the longest term you've seen a loan made available for ? ... over 20-years ?

- Is it possible to source a list of all the Revenue approved Pension Trustees & if so, can anyone tell me where please ?

Thanks

G>


----------



## selfinvest

*SAPS*

Hi, As you probably know by now, if the scheme is Revenue approved then it appears to be limited to a term of 15 years. No interest only loans. Details from the Revenue. Have you made any progress on these issues, which you can share, since your last post?


----------



## Marc

Time to bring this post back to life and update with some developments in the market for Self Administered Pensions.

By way of disclosure I can confirm that I personally have a Small Self-Administed Pension Scheme (SSAS).

In terms of eligibility, I am eligible to hold a SSAS as I am an employee (PAYE taxpayer) I am not a company director (although a company director is eligible, the self-employed are not).  If you are an employee, it should be noted that it is necessary to obtain the consent of one's employer to sponsor the pension scheme.

*Flexibility*
The SSAS allows me to have a considerably more flexible pension than either a PRSA or a personal pension from an Insurance Company.

One of the reasons for this is the access to an un-fettered range of investment options. By this I mean that I am able to invest in any asset class permitted by the Revenue without any restrictions being imposed by an Insurance Company. 

For example, it is a little known fact that although the Revenue will allow investment into commodities within Irish pension funds, it may not be possible to hold these within all forms of pension. The problem arises from the way in which insurance companies are supervised and regulated, specifically, the European Communities (Life Assurance) Framework Regulations 1994. These regulations specifically prohibit an Insurance Company from investing in commodities.

Where a pension is structured as a trust (such as in a SSAS), this restriction does not apply thereby offering greater investment choice.

*Costs*
There are certain fixed costs associated with operating a SSAS and having a pension trustee. I pay a little over €1000pa. This would be equivalent to a 1% annual charge on a €100,000 pension fund. 

It is therefore reasonable to conclude that the charges for a SSAS are probably uneconomical for a pension fund of less than €100,000 compared to an insured pension product.

*Stockbrokers*
Like many AAM readers, I had a look at all the established Irish Stockbrokers, laughed heartily and proceeded to apply the wonderful power for good that is global competition.

The recent *Markets in Financial Instruments Directive* (*MiFID) *now allows stockbrokers to "passport" their services across the EU from one country to another.

The key here is to not only find a low cost broker internationally, but also one who can operate within a pension trust.

I have therefore opened an account with a major online broker offering trading in multiple currencies and on multiple exchanges for a fixed-fee per trade rather than the more normal percentage per transaction.

*Investment advice
*There is a misconception that a self-administered pension means there is no role for an adviser. Recent experience has shown that this is simply not the case and the need for competent financial advice is possibly greater than ever.

In my experience an accountant will have typically done a very good job of selling the tax benefits of setting up a SSAS. However, most of the schemes that I review are sat with large cash deposits and the member simply has no idea how to invest this cash.

In the past, where cash has been invested, the "traditional" route seems to have been to either seek out the services of a stockbroker or to make an investment into property. Clearly recent events have shown that both of these options are not without their risks.

With the Irish Stockmarket now making up just 0.22% of the World (source: MSCI World Index end Sept 2008) the folly of buying a small basket of Irish Companies as a safe, blue chip or in any sense diversified portfolio has now been exposed for the madness that it always was. 

Furthermore, the credibility of the advisers who sold such highly concentrated positions in such a small range of stocks and mislabled this as a "portfolio"" has clearly been heavily damaged.

Equally, the frenzy of property speculation has left many with ill-conceived investments which may be highly leveraged, concentrated and illiquid. 

The key to good financial advice in my opinion is simply the absence of the need to make a forecast about the future. 

If I see "advice" which contains words such as  "I feel, I believe or I think" I know that there is a hope of a result - I would consider anything along these lines to tend to be speculation about the future. 

By contrast, investment advice is based upon an expectation of a result. E.g I expect an investment in the stockmarket to be more risky than an investment in government bonds. I therefore expect a higher return over time as compensation for the higher risk.

The foundation of Modern Portfolio Theory was a 1952 paper, "Portfolio Selection" by Dr Harry Markowitz in which he established a theory explaining the best way for an investor to choose a portfolio.  Modern Portfolio Theory is of such fundamental importance in investing that the economists that formulated the theory received the Nobel Prize in Economic Science in 1990.

*Modern Portfolio Theory has four basic premises:*


Investors are inherently risk averse. Investors are more concerned with risk than they are with reward. This sets them apart from speculators.
Securities markets  are efficient. Most studies support this idea.
The focus of attention should be shifted away from individual securities analysis to consideration of a portfolio as a whole, predicated on the explicit risk/reward parameters and on the total portfolio objectives. The efficient allocation of capital in a portfolio to specific asset classes is far more important than selecting the individual investments.
For every risk level, there is an optimal combination of asset classes that will maximise returns. Portfolio diversification is not so much a function of how many individual stocks or bonds are involved, as it is of the relationship of each asset to each other asset.
                 Competent Asset allocation within a pension therefore involves dividing the  investment portfolio among different asset categories such as equities, fixed interest, cash and property and the process of establishing which mix of assets to use, is largely determined by investment objectives, time horizon and tolerance to risk.

The rationale for asset class investing is simple: capital markets work and diversification between asset classes increases return and reduces risk. Over the long run, markets reward investors with positive returns for taking risks and providing capital. If they did not, the capitalist system would have collapsed long ago. Market prices reflect the knowledge and expectations of all investors. Nearly forty years of academic research has shown that traditional fund managers are unable to outperform the markets by anything more that we would expect by chance.


*"The idea that any single individual without extra information or extra market power can beat the market is extraordinarily unlikely. Yet the market is full of people who think they can do it and full of other people who believe them….Why do people believe they can do the impossible? And why do other people believe them?*
_Daniel H Kahnemann, 2002 Nobel Laureate in  Economics._


----------



## ksmith169

Hi Marc and All,

First post. Please be gentle!

The cost of Irish Stock Brokers are ridiculously high. Does anyone have any more information on the "*Markets in Financial Instruments Directive* (*MiFID) and passport services" *available? Which foreign stock brokers can do this? In particular for an SSAP?

I am hoping to do this for my SSAP hence need the stock broker to recognise what an SSAP is and treat dividend withholding tax correctly etc. I am guessing anyone doing this will have to have an Independant Trust Company who is comfortable with it. I already have my SSAP set-up and my Independant Trust Company but I haven't done anything yet as the cost of Irish Stock Brokers is so high.

Does anyone know of any international stock brokers who can do what Marc is talking about? Would any UK Stock brokers who do SSIP be an option?

Could this as simple as setting up an SSIP with a UK based Stock Broker for example see Interactive Brokers? I cannot post link yet (less than 15 posts) but put www in front of this interactivebrokers.com/en/accounts/individuals/sippAccount.php

One problem I see with this is that IB state you must be UK resident for this? Would the MiFID regulations take care of that?

Or SSIP with TDWaterHouse ? 

tdwaterhouse.co.uk/typesofaccount/sipp.cfm

Best Regards,

Kevin.


----------



## Cloggervic

US said:


> Can't answer the "best value" question, but I think there are only a couple of firms offering this service, so it shouldn't be too difficult to make the comparison yourself.
> 
> As to the US mutual funds, in general a non-"US person" cannot, for US legal reasons, invest in a US mutual fund. You can, however, invest in exchange-traded funds, which are similar though not identical. I have no idea what an "inverse index fund" is, so I can't tell you if there's an exchange-traded alternative in which you could invest.


 
I don't know where you got the idea that a non-US person cannot invest in US mutual funds.  There is no rule in US law about that. It would be impossible to administer. Consider an ex-pat temporailiy living in the US, and he gets himself a US broikerage account or IRA and invests in mutual funds. He then returns home. If there was such a law, you are saying he would be forced to liquidate. But this is not so, because I have sebveral colleagues who have been in that situation.

You may have to open a US brokerage account, and to do that, you will need either a US social security number or a US taxpayer ID. You can get a US taxpayer ID online.  When the US mutual fund makes a distribution, if you are not US resident, a US tax will be deducted at a rate that depends on what it says in the bilateral tax treaty between the US and your home country. This tax is allowed as tax credit against any tax due in your home country. So the problem is, if you want to own the US mutual fund in a tax-deferred pension account, the US tax will still be paid, and you may not be able to claim a credit for it in your home country. There is a solution however:  You sell the fund just before it makes the distribution, and buy it back the day after, as it will have fallen in price by the amount of the distribution. That way you end up with the same number of units, plus cash more or less equal to the distribution, but without the tax issues.

You just need to have a brokerage account that is able or willing to hold such an investment. It


----------



## Rik101

*Help re MiFID's*

Hi Marc /All

While surfing for info re Irish trustees and on line brokers I came across your post and your point re *MiFID. *

I have been trading my non pension funds with a very good US based on line broker for 7+ years now, however they do not/can not offer facilities to non US based private pension fund owners (ie SASS/P's) even if the Irish trustee sanctioned them. 

Any Irish trustee company I have spoken to date all offer only one company. Yes, they all offer the SAME one . This broker has offices based in London and elsewhere, however their primary focus from their website would seem to be FOREX.  Their offering with general equity trading seems quite basic as they have a note in their small print that Option trading is "Coming Soon". There pricing  for trades is in US dollars approx $10 per trade which is not great (I pay $5 no stock limit)  There is no mention of their UK/Ireland pricing structure. So I am concerned if they are really focused on their stock trading clients. In addition, they only offer the standard UK guarantee which is approx £50K(sterling) if they go out of business 

So I am really looking around for any other options out there . Can you Help please. 
TIA


----------



## DecQ

*Online Broker for Self Administered Pension Scheme*

Hi Marc & all,

I have a Small Self Administered Pension Scheme (SSAPS). Does anyone know of an online direct access broker that will allow me to open an account for the pension fund (or trust fund) so that I can invest some of the fund directly?  

Marc - you stated in one of your earlier posts that...  
"I have therefore opened an account with a major online broker offering  trading in multiple currencies and on multiple exchanges for a fixed-fee  per trade rather than the more normal percentage per transaction."

Can you name the broker? (I will send you my contact details if you cannot/do not want to name them on this forum.)

Thanks all.


----------



## vesuvius

DecQ said:


> *Online Broker for Self Administered Pension Scheme*
> 
> Hi Marc & all,
> 
> I have a Small Self Administered Pension Scheme (SSAPS). Does anyone know of an online direct access broker that will allow me to open an account for the pension fund (or trust fund) so that I can invest some of the fund directly?
> 
> Marc - you stated in one of your earlier posts that...
> "I have therefore opened an account with a major online broker offering  trading in multiple currencies and on multiple exchanges for a fixed-fee  per trade rather than the more normal percentage per transaction."
> 
> Can you name the broker? (I will send you my contact details if you cannot/do not want to name them on this forum.)
> 
> Thanks all.



Hi Marc & all

I have the same query as DecQ above(22 aug 2012).

I will send you my contact details if necessary.
thanks,vesuvius


----------



## jack123

Hi Marc,

You mentioned in an earlier post
"I have therefore opened an account  with a major online broker offering trading in multiple currencies and on multiple exchanges for a fixed-fee per trade".
and
"I pay a little over €1000pa" in trustee fees.

Would you mind letting me know the name of this broker and trustee please?

I cannot find any reasonably priced broker that recognises my SSAS trust? 

I will perform my own due diligence and won’t consider this advice in any form.
You can send me a PM if you do not wish to reply here.

Thanks


----------



## MrBoring

jack123 said:


> Hi Marc,
> 
> You mentioned in an earlier post
> "I have therefore opened an account  with a major online broker offering trading in multiple currencies and on multiple exchanges for a fixed-fee per trade".
> and
> "I pay a little over €1000pa" in trustee fees.
> 
> Would you mind letting me know the name of this broker and trustee please?
> 
> I cannot find any reasonably priced broker that recognises my SSAS trust?
> 
> I will perform my own due diligence and won’t consider this advice in any form.
> You can send me a PM if you do not wish to reply here.
> 
> Thanks


Hi,
I have the same query for a €1M executive pension pot that I am looking to see if I can lower the Trustee and AMC.  Can anyone provide information on the above?
Thanks in advance!


----------



## trackdaychamp

MrBoring said:


> Hi,
> I have the same query for a €1M executive pension pot that I am looking to see if I can lower the Trustee and AMC.  Can anyone provide information on the above?
> Thanks in advance!



Is it possible to find out who is providing Trustee services for €1,000 total or €1k+vat like Marc mentioned above? I am currently paying 1750 + vat for my SSAP and I'm 38 so plenty of years left till retirement and I'm always looking to tidy up our numbers


----------



## Marc

This tread is from at least 2012.

regulation has significantly increased pension costs in Ireland in recent years.
The best pricing for an exec pension in Ireland is now around 0.40% wholesale plus the cost of an adviser to administer the scheme.

it may be possible in some instances to move the pension to another EU country and my pension trustees charge a flat fee of €2,000 to €3000pa depending on the size of the pension fund so it is still possible to reduce costs here.


Marc Westlake 
Chartered Certified and European Financial Planner 
www.globalwealth.ie


----------

