# Self-administered pension



## mags (7 Jan 2004)

Apologies if this has been asked before but I can’t find it – how do you go about setting up a self-administered pension scheme where you personally hold the share certificates etc.?  I like this idea as I really don’t trust any company to look after my money for such a long time (and they charge too much).  I wouldn’t want any advice from whoever set up the pension so how much (roughly) would it cost to set up and run?  I think Brendan Burgess has mentioned before that he has one of these pensions but the only ones I can find are ones where someone else holds the share certificates and your cheques are made payable to a life insurance company.  Thanks.


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (7 Jan 2004)

Is this any use?



In the guide ( www.askaboutmoney.com/guide/ch11.htm ) Brendan says that he considers it necessary to have a fund of c. IR£100K to make it worthwhile setting one up.


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## mags (7 Jan 2004)

Thanks for the links 0 - they were very useful.  I'm an employee in non-pensionable employment so it looks like an SSAP is not an option for me which seems very unfair - why shouldn't I be able to control my own pension savings?  I think I would prefer to invest directly in property or in the stockmarket (i.e. not as a pension) than hand my money over to someone who'll fleece me on charges and have control over my retirement savings.  The mentions (in the discussion you linked to) of how good Equitable were has done nothing to warm me towards life/pension companies!


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (7 Jan 2004)

> The mentions (in the discussion you linked to) of how good Equitable were has done nothing to warm me towards life/pension companies!



That's not really a fair reflection of the topic in question - it does mention that Equitable's charges were quite low relative to other pension providers and that they redistributed more returns that most other WP providers however. Unfortunately these "benefits" to customers contributed at least in part to the subsequent GAR/WP problems...



> I think I would prefer to invest directly in property or in the stockmarket (i.e. not as a pension) than hand my money over to someone who'll fleece me on charges and have control over my retirement savings.



You could be cutting off your nose to spite your face so by ignoring the significant tax advantages (particularly to a high rate taxpayer) available in pension versus non-pension savings.

Anyway.... you don't necessarily have to get fleeced on pension charges or lose complete control of your pension investments if you shop around for the best deal which is suitable to your needs. I think your distrust of pension providers/intermediaries may be a bit exaggerated to be honest.


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## Alan Moore (7 Jan 2004)

*Methinks you're looking......*

..... for a self-directed personal pension rather than a self-adminstered scheme.


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## mags (8 Jan 2004)

*Re: Methinks you're looking......*

No, I don't think that's what I'm looking for - unless you can point me to one where there's no annual management % fee and I can hold the share certificates.  

The SSAP described by Brendan Burgess in the guide that 0 linked to above sounds very fair to me - say a €4,000 set-up charge and an annual admin fee of €400 and I pay all dealing costs.  

Most of the self-directed schemes seem to have a % annual fee - what do they do for this money?  If I decide which stocks to buy, pay for the dealing costs and generally leave the the stocks passively apart from new purchases, what do they do for this % fee?  After a few years, pension funds can be sizeable, often well over €1 million by retirement, what do they do to deserve a % of this?

I don't think it's a complete no-brainer that a pension is the best investment just because of the tax relief:

- apart from the 25% lump sum, it's a deferral of tax rather than a genuine tax relief - and given how low tax rates are at the moment, it's possible (likely?) that by the time I retire, tax rates will be higher than now, particularly given our current demographics.

- although a pension fund's growth rolls up tax-free, you have to deduct the annual management fee and other charges, including initial bid/offer spread from the gross growth rate - and given how low returns are and are likely to remain, these fees are a signicant deduction from your fund's growth rate

- I know 0 thinks I'm exaggerating my distrust of the life/pension companies but I'm not (and 0,given what you fessed up to owning, I'm amazed you don't agree).  I absolutely do not want to end up poor in my retirement.  Handing all of your money over for a prolonged period of time just because of a seemingly favourable tax break needs very careful consideration and I don't think I can do it.  I'd rather hold a share certificate or property deed in my sticky paw and know that it was mine.  I'm just cross I can't get tax relief given that I'm saving for my retirement.


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## Alan Moore (8 Jan 2004)

*Mmmmm......*

I don't see the problem with not holding the shares. They are being held for your retirement and you are getting tax relief. Effectively they are yours and you can buy and sell at will.

Annual Management Fee, I accept your point and its a good one. Most SDPP are offered through stockbrokers. If you have a decent sized fund I'm sure that your stockbroker  may be open to negotiation on the charges. I'm not suggesting that you will get what you want but it may be closer to what you want.

"and given how low tax rates are at the moment, it's possible (likely?) that by the time I retire, tax rates will be higher than now, particularly given our current demographics"

I accept that 75% of it is a deferral of tax. However for most of us our retirement incomes will be lower and the likelyhood is that the tax payable as a percrntage (allowing for credits etc) on the reamining 75% will be far less than the relief we recieved on the contributions paid.


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (8 Jan 2004)

*Re: Mmmmm......*



> I know 0 thinks I'm exaggerating my distrust of the life/pension companies but I'm not (and 0,given what you fessed up to owning, I'm amazed you don't agree).



If you're referring to the fact that I have WP and UL pension and non pension investments with EL I would point out that, notwithstanding the GAR related problems affecting EL's WP funds, I have not lost a penny on these and my EL pension is actuall performing better that my other pension holdings so far...


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## mags (8 Jan 2004)

*Re:  Mmmmm....*



> I don't see the problem with not holding the shares. They are being held for your retirement and you are getting tax relief. Effectively they are yours and you can buy and sell at will.



I think it's a comment in the Savings and Investment guide that got me worried - something about being sure your broker is secure if you go with a nominee account rather than holding shares yourself.  If the broker goes bust whilst holding my shares for me, are they mine or would they go in the general pot to be allocated by the liquidator?


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (8 Jan 2004)

*Re:  Mmmmm....*

Yes - holding certs yourself (assuming YOU put them in a safe place - e.g. bank for safekeeping or whatever) is more secure than having somebody hold them on your behalf or maintaining your shareholdings via a nominee account. A CREST personal account might also be a similarly secure option but I think that there was some uncertainty about this in the context of the Morrogh affair.


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## mags (9 Jan 2004)

*Re: Mmmmm....*

..... which brings me back to my problem of having to decide between trusting someone to mind my retirement savings so that I can get tax relief or not getting the tax relief but knowing that my retirement money was secure.


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## Pilot (10 Jan 2004)

*Above*

All the fuss is about % - but how much could you stick away each year into a Self admin scheme if you had one? If you're talking buttons, like less than €20,000 you're not in the market financially whatever about how the market is structured. So how much are you willing to invest?


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## mags (11 Jan 2004)

*Re: above*

At least €20,000 per annum out of my net and I should probably try to do €40K gross if I could manage it.  I would hardly have described €4,000 as a fair set up cost if I was talking buttons.


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