# Pensions Question



## Eggball (25 May 2008)

Hi All,

I've been paying quite a substantial amount of my weekly wage over the last eight years into the Irish Life Consensus Fund as an AVC for my retirement (I'm 44).  

Like a lot of people, I haven't been paying a lot of attention to it up to now, but having reviewed it the other day, it looks to me like the pot I've built up so far is only about 1,700 euro ahead of the contributions I've made to the fund.   

Now, I'm aware that these kind of funds always take a healthy skelp of your contributions in the first few years as their payment, but even allowing for this, 1,700 euro doesn't sound to me like a lot, especially when they've given a rather conservative estimate of around 6% growth per annum.  Do you think I should be looking for an alternative provision?


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## ajapale (25 May 2008)

Moved from Savings and Investments to  PRSAs and Pensions


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## Complainer (25 May 2008)

What specific fees and charges are you paying on your current AVC?


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## GeneralZod (25 May 2008)

You don't say what your main pension is which will affect the answer.

If you check the terms they're probably taking a commission on the the payments (~5%) and then an annual management charge on the accumulated fund (0.5% - 1.5%) for their expert investment services. 

I'd suspect that your pension's dire performance after 8 years is the norm. If anyone on AAM can cite a personal counter example then please do. The tax relief masks just how bad it is. The 6% is a fantasy.


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## LDFerguson (25 May 2008)

Ignoring charges, the average Irish Managed Pension fund is up 1.7% per year over the past 8 years to the end of April 2008. This average has been dragged down by events of recent times - average Managed Fund is down 12.6% over the 12 months to the end of April 2008. But if you look out longer, the same average is +7.6% per year for the past 12 years. 



> Now, I'm aware that these kind of funds always take a healthy skelp of your contributions in the first few years as their payment...


 
Some pension policies do take front-loaded charges in the first year or two, but these are becoming rarer. Many spread the charges out evenly. You should check with Irish Life what exactly are the charges as they apply to your AVC. 

You mention that your fund is ahead by €1,700 but don't say what the overall size of your AVC is. Being ahead by €1,700 on a fund worth €100,000 is very different to being ahead by €1,700 on a fund of €10,000. You might clarify what your overall fund size is.


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## Eggball (25 May 2008)

Thanks for answering, everyone.

My pot at November last stood at 20458 euro against total contributions of 18800, a paper profit of 1658 euro after 8 years.  Not a huge amount, but is it out of line with what the generality of investors are experiencing?  As for my main pension, if I qualify for the full whack, it should be somewhere in the region of about 120 euro per week at present values, and since it's a final salary scheme, I'm reluctant to give it up.  

I'll certainly check out the charges on the scheme.  

Thanks.


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## Ask the dog (26 May 2008)

I have a similar experience with an AVC, which is also with Life life. 

I have been contributing about €650 per/month for the last 3 years. Total contributions paid to date totals about €22,500. 
I called Irish Life last week and was told that my total fund value is now worth €18,400. Down about 18%.

However, this time last year the figures were just about breaking even (contibutions paid in = total value of AVC). So all the negative losses have occurred in the last 12 months.

The contributions are invested as follows-  25% Secured Investment fund, 50% consensus Fund, 25% Active Managed Fund. 
So it's partly my fault for not managing this AVC properly. 

Oh ! wait a minute - I thought I was paying Irish life a heafy sum for doing that for me - silly me for being so naive.......


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## Eggball (26 May 2008)

According to Irish life's website, the Consensus 8 fund, in which my pension is invested, has grown steadily over the last five years, rising 80% between June 2003 and June 2007, however it crashed by 30% between June last year and March this year.  Now, I know that these things are supposed to even out over the lifetime of a pension, but since the fund has risen in total by 50% over the last five years, I would have thought I would be further ahead than 1700 euro.  It bottomed out in March and has climbed by about 7% since then, but would like to think that somebody at Irish Life is moving some of my investments into more secure areas.  I think I'm going to have to call in my FA and start going through the details with a fine tooth comb.


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## ClubMan (26 May 2008)

You don't seem to have clarified what the charges are on your specific pension. 

Comparing your returns to those that others are seeing is meaningless unless they are paying similar charges to you, have invested a similar amount of money over the same sort of timeframe and are invested in comparable funds.


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## Eggball (26 May 2008)

Good point, and thanks for making it, Clubman.  I've got my guy coming out to see me on Thursday, and he'll be closely questioned on these matters.  Any other questions you think I should ask him would be greatly appreciated.


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## LDFerguson (26 May 2008)

Eggball said:


> ...but would like to think that somebody at Irish Life is moving some of my investments into more secure areas.


 
The Irish Life Consensus is a passivley-managed fund, so by definition nobody in Irish Life is making active management decisions like what you suggest.  They follow the combined decisions of the other funds that they track.  This is what the Consensus Fund is designed to do.


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## ClubMan (26 May 2008)

Eggball said:


> Good point, and thanks for making it, Clubman. I've got my guy coming out to see me on Thursday, and he'll be closely questioned on these matters. Any other questions you think I should ask him would be greatly appreciated.



Who is "your guy"? Is he an independent financial advisor or a tied agent of _Irish Life_? If the latter then don't expect independent, professional advice in your best interests.


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## ClubMan (26 May 2008)

Eggball said:


> would like to think that somebody at Irish Life is moving some of my investments into more secure areas.


At 44 how long to go to your planned retirement date? If it's c. 20 years then it may be premature to start switching to more conservative/less volatile investments just yet. 

As mentioned above two key issues when choosing a pension are charges (usually the lower the better but balance this against the service on offer) and the range of funds on offer and choosing a suitable one (or more) that meet your specific needs. There is no one size fits all solution and only a good understanding of your circumstances and needs will determine what is most suitable (within the constraints of the usual trade-offs that are involved).


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## Satanta (26 May 2008)

Eggball said:


> ....rising 80% between June 2003 and June 2007, however it crashed by 30% between June last year and March this year....
> 
> ...but since the fund has risen in total by 50% over the last five years


I assume you are getting the "50%" from the 80% rise and the 30% fall.

Remember, something valued at €x which rises 100% (now €2x) only has to suffer a 50% drop to be back at €x. 

So the "50%" rise you mention is probably a 26% rise.


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## aidan119 (26 May 2008)

Also remember that the 26% rise only applies to the value of the fund at June 2003.
Your weekly contributions after that date would be bought at increasing prices as the unit price was rising until June 2007. So the return for each subsequent contribution is less than the return on the previous  contribution in a rising market.
You would need to establish how many units your contributions bought each week/month to find your correct rate of return.

I have often wondered why annual pension statements are not compelled to show this rate of return.


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