# Eagle Star PRSA Default Investment Strategy or Choose Funds?



## Imelda B (8 Nov 2006)

I am in the process of taking out a standard, execution only PRSA with Eagle Star. Do I go for the Default Investment Strategy or Fund Choice Option? The fund choices look interesting but I know nothing of these things and feel that unless I start educating myself about equities, I should go for the DIS.

By way of background, I am 43, sole trader, income of 35K annually, a pension fund of 50K accumulated to date and cash of 620,000 to invest (with my spouse), 200K of which we have earmarked for a German property invesment syndicate.


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## ClubMan (8 Nov 2006)

You really should be paying somebody for independent, professional advice in your situation. A lot depends on your target retirement age. If it was c. 60 with 17 years to go then it could be argued that you have time enough to stat in a high equity content-risk/reward fund but if you wanted to retire earlier and take pension income then a more conservative choice might be in order. Only somebody such as a paid independent advisor can probably get enough personal details to advise you appropriately.


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## F. Kruger (8 Nov 2006)

Imelda B said:


> Do I go for the Default Investment Strategy or Fund Choice Option?


 
I don't that that you have to stick with the strategy selected at outset for the term of the plan. If you think that one of the sector funds might be the place to be at a later date then you should be able to redirect or switch at that time.

If you do not think that you will be buying an annuity at retirement then it might be wise to Default to ARF as opposed to Annuity(you also make this choice at outset).


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## ClubMan (8 Nov 2006)

F. Kruger said:


> it might be wise to Default to ARF as opposed to Annuity(you also make this choice at outset).


Do you mean when originally starting the pension? I don't remember ever being asked that for any of the several pensions that I have...


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## F. Kruger (8 Nov 2006)

It's unique to ES. I think they put alot more thought into the Strategy than most.


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## ClubMan (8 Nov 2006)

I have an _ES PRSA _and don't remember choosing anything in this respect.


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## F. Kruger (8 Nov 2006)

Proposal States

"Do you wish to follow the DIS?                 Y/N

If YES, the default is appropriate for the purpose on an Annuity at retirement.

If you wish the default strategy to be appropriate to invest in an ARF at retirement, please tick here.     "

If NO, sign declaration below and advise of fund choice...........


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## Guest126 (8 Nov 2006)

I would have to second Mr Kruger on this one!


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## z105 (3 Jun 2008)

Hi,

Can I re-ignite this thread title please ?

Can I ask opinions as to whether one should stay with the Default Investment Strategy or Change to choosing funds (considering the world economy looks set for a rocky ride - we think) ?

Go easy on me with replies I am a serious novice in this area


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## roland (3 Jun 2008)

Havealaugh said:


> Hi,
> 
> Can I re-ignite this thread title please ?
> 
> ...


 
If you are a serious novice you are probably best staying with the Dfault Investment Strategy.  By the by, if you are a serious novice it doesn't seem to make sense that you would invest 200k in a German commercial property syndicate.  As investments go these syndicates would tend to be pretty much as high risk as it gets.  Usually geared returns (and losses), high costs.  Unless you are you an expert in German commercial property, I would seriously suggest you diversify your assets much wider than your approach suggests.


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## z105 (4 Jun 2008)

> If you are a serious novice you are probably best staying with the Dfault Investment Strategy. By the by, if you are a serious novice it doesn't seem to make sense that you would invest 200k in a German commercial property syndicate. As investments go these syndicates would tend to be pretty much as high risk as it gets. Usually geared returns (and losses), high costs. Unless you are you an expert in German commercial property, I would seriously suggest you diversify your assets much wider than your approach suggests.


Thanks.

I think you'll find it was the OP that had the 200k to invest in a German property syndicate !

The DIS is losing money and I'm wondering should the PRSA be moved to more secure matrix funds ?


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## Brendan Burgess (6 Jun 2008)

I have added two tags to this thread as an experiment.


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## DerKaiser (10 Jun 2008)

I've attached a link to a paper on the subject.  The conclusion is that a DIS is no substitute for a regular review (preferably with an expert independant advisor) of the policyholder's circumstances and appetite for risk
[broken link removed]


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## John Rambo (10 Jun 2008)

Is having regular reviews not adding serious costs? Surely the type of people who opt for PRSA's have vaguely similar goals and situations? Why would higher risk investments when retirement is a long way off and a gradual switch to less risky investments closer to retirement not be suitable for the vast majority? (and I did read the paper)


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## DerKaiser (11 Jun 2008)

Is there a type of person who opts for a PRSA?
If you're putting 10%+ of your income into one of these you should be having regular reviews with your broker.


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## ClubMan (11 Jun 2008)

What added value does the "broker" being to the table here? S/he obviously cannot predict which stocks/funds will perform best into the future. So presumably it's simply a matter of suggesting funds with a suitable risk/reward profile and diversification to match the pension holder's needs? For anybody with, say, a few decades to go to retirement a fund or funds with a high equity content and risk/reward profile should at least be considered. For anybody nearing retirement they should probably move into less volatile investments (depending on their plans for their pension lump sum fund). Those who have a while to go to retirement but insist on choosing conservative investments should be encouraged to understand that this might not be in the best long term interests due to the potential impact on limiting long term returns. I'm not sure that many (most?) individuals necessarily need individual consultations on a regular basis to figure this out.


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## DerKaiser (11 Jun 2008)

An individual might estimate that they need an income of €30k p.a. in retirement.  If they have 20 years to retirement to build this up and can just about afford the contributions then this individual should not be advised to invest in risky funds.

If the same individual finds themselves with 5 years to go, having inherited money in the mean time that satisfies their retirement income requirements, they might choose to invest their pension in riskier stocks and opt for an ARF rather than an annuity simply because they are now in a position to risk some losses.

A DIS is no substitute for regular reassessment of your financial position.


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## John Rambo (11 Jun 2008)

At what cost? And I too was told I had to decide whether I was going to want an annuity or an ARF. Fair enough if you come into money and the PRSA is no longer a big deal then maybe you might want to reassess the situation but for most people lowering the risk profile of their portfolio as retirement approaches makes most sense.


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