# New Ireland pension charges



## The Pool Boy (12 Jul 2016)

Looking to have a review of the company pension scheme(5 employees) later this month. Apart from the poor investment returns the scheme has been providing, here is a summary of the current fee structure from New Ireland that we are receiving. Can anyone comment on how competitive this is;

·  Allocation Rate is 104%

·  Bid Offer Spread is 5%

·  Policy Fee is €3.49 per member per month

·  Annual Fund Management Charge is 0.65% to 1.1% depending on fund (Standard Funds are at 0.75%)

·  Pension Board Levy €8.00 per member per annum.


----------



## Alan Considine (12 Jul 2016)

The Allocation at 104% is excellent and perhaps too good to be true? Double check that. You are loosing the extra 4% on your contributions to the bid/offer spread 5% so I cant see how your pension has made any considerable gains as returns have been poor.
The AMC looks fairly competitive. The most important variable on the overall return on your pension will be the performance of the funds you are invested in. However, it is very important to have the costs/charges competitive also.  

Zurich funds have performed very well over the last 30 years and the following contract is available from them.


·  1% Annual Management Charge

·  Allocation Rate 100%

·  Bid/Offer 0%


Policy Fee is €0

·  Their best fund has averaged 10% p/a since 1989. And 5.7% p/a for last 10 years. 

Better deals are available depending on the size of contributions and the ages of the employees.

Regards
Alan Considine QFA


----------



## The Pool Boy (13 Jul 2016)

Alan Considine said:


> The Allocation at 104% is excellent and perhaps too good to be true? Double check that. You are loosing the extra 4% on your contributions to the bid/offer spread 5% so I cant see how your pension has made any considerable gains as returns have been poor.
> The AMC looks fairly competitive. The most important variable on the overall return on your pension will be the performance of the funds you are invested in. However, it is very important to have the costs/charges competitive also.
> 
> Zurich funds have performed very well over the last 30 years and the following contract is available from them.
> ...


The allocation rate is correct. I copied all the charges directly from correspondence I received from them.

Fund performance has been poor though over the last few years. That's what I need to get a handle on.


----------



## Alan Considine (13 Jul 2016)

Apologies the Zurich Policy Fee is €3 per month per member and the Pension Board Levy is €8 per annum per member. 

As I said above there is a Zurich Fund which has an annualised performance over 10 years of 10.4%. This is the best performing Fund.

You will need to be careful and consider the ages of the members etc and their risk tolerance. 

Any Questions fire them up! If you want me to run some numbers just ask..

Regards
Alan Considine QFA
Gleeson Insurance Ennis


----------



## Steven Barrett (28 Jul 2016)

You should look to change the charging structure, the bid/offer spread is an old charge. Take 5% from your 104% allocation and you get a net allocation of 98.80%. The rest of the charges are relatively minor issues that may or may not be available under different contracts. 

On the fund performance, what funds were you invested in and what were your expectations? A lot of the time, it can come down to not having the correct fund to match your expectations or wanting higher returns without taking the investment risk strategy required to meet what you are looking for. 


Steven 
www.bluewaterfp.ie


----------



## The Pool Boy (3 Aug 2016)

SBarrett said:


> On the fund performance, what funds were you invested in and what were your expectations? A lot of the time, it can come down to not having the correct fund to match your expectations or wanting higher returns without taking the investment risk strategy required to meet what you are looking for.



Thanks for all your replies and for taking the time out to respond.

I've had a look at my investment split and it is as follows;

*Current Fund Selection* *Contributions (%)*
Elements Fund 33%
BNYM Global Real Return Fund 34%
Protected Assets Fund 33%
Total: 100.00


I'm 20-23 years away from retirement and hoping I'm not missing out on growth through poor investment choices.


----------



## Steven Barrett (4 Aug 2016)

You need to take more risk then. All of those funds have an element of protection within in, they are not designed to maximise growth. The more investment risk you take, the greater the expected market return. They go hand in hand. 

You have to decide on the level of risk that you are comfortable with. If you want to maximise the growth potential, something like Prime Equities is a good, low cost passive strategy (I'm 40 years of age and invested in this fund). It's 100% equity though, so you have to take the downs with the ups. If a 35% drop will freak you out, reduce the level of risk exposure. And once you decide on your strategy, stick with it.

Steven
www.bluewaterfp.ie


----------



## The Pool Boy (4 Aug 2016)

Thanks Steven.

Looking at that fund on the new Ireland website, it's only been in existence for 3 months (as have Prime 3,4 &5) - is that not too short a time to gauge the risk/reward profile of the fund...?

Looking at my investments they are at the following returns for the past 12 months (and 5 Years);

Elements Fund -2.1% (+2.8%)
BNYM Global Real Return Fund +8% (5.7%)
Protected Assets Fund -10.5% (+2%)

It's the Protected Assets Fund that is really hampering any growth (the name implies it should be safer from such falls!)

Are you suggesting putting all my pension into one fund or keeping a mix...?

I appreciate it my own decision at the end of the day.


----------



## Sunny (4 Aug 2016)

They are really awful 5 year performance figures. Especially if you are still 20-23 years off retirement.


----------



## The Pool Boy (4 Aug 2016)

From the New Ireland website - "For performance quoted greater than a year, figures are annualised."


----------



## Steven Barrett (4 Aug 2016)

The Pool Boy said:


> Thanks Steven.
> 
> Looking at that fund on the new Ireland website, it's only been in existence for 3 months (as have Prime 3,4 &5) - is that not too short a time to gauge the risk/reward profile of the fund...?
> 
> ...



Yes, the Prime portfolios have only been in existence for a short time but the separate funds that make up the portfolios haven't. Add in they are index funds, so past performance is no indication of a star fund managers skill, the returns should have been what the index they tracked got. State Street are one of the biggest passive fund managers in the world and the tracking error on their funds is very low (how close their fund is to actually being the same as the index they track). 

The Protected Assets fund is supposed to come into its own when there is a market crash. Markets have been very strong for the last number of years, so whether the "protected" element worked is largely untested. 

You should have a diversified portfolio, that is why I recommended the Prime ones. The equity element invests all around the world and the bond element is global bonds. 
It's not about the number of funds you have, it about where those funds invest. 


Steven 
www.bluewaterfp.ie


----------



## johnny1234 (4 Aug 2016)

Find out what the TER is. (total expense ratio) That will yell you the real expense of the charges.


----------



## Steven Barrett (5 Aug 2016)

johnny1234 said:


> Find out what the TER is. (total expense ratio) That will yell you the real expense of the charges.



Good luck with finding that out! But all the protective elements to the funds that OP is invested in comes at a cost. 



There is no definition of what makes up a TER. Different fund managers can include/ exclude different costs, so even if they do publish the TER of the fund, it probably isn't comparable to other funds. 


Steven 
www.bluewaterfp.ie


----------



## johnny1234 (5 Aug 2016)

The TER  is the International acclaimed method of stating the costs of a particular fund, If you check with other non Irish funds they will happily release the TER of their own funds. NI will not provide these figures as they are not obliged to release these. Just take a look at other providers 'fact sheets' and this info forms part of the description.


----------



## gnf_ireland (11 Aug 2016)

Sunny said:


> They are really awful 5 year performance figures. Especially if you are still 20-23 years off retirement.



I am in the same age profile as yourself, and am also currently with New Ireland. I see your fund choice has a risk profile of around 4, whereas mine have 6 and 7 risk categories. I am willing to take risks for the next 15 years with the funds, and then decide what to do with them. 

I would agree with the comments above - need to reconsider your risk appetite and then define the strategy based on that


----------

