# Pension fees



## mrbrian (11 Mar 2015)

Hello,

I've been putting in my time lately to understand all the pension options available to me.

I (stupidly) signed up 3 weeks ago to a Zurich pension on advice from a broker. I believe I am now going to cancel this. The fees are as follows.

99% allocation rate
1.25% AMC
€3 per month policy fee
Early encashment 5/4/3/2/1%

And finally a 5% bid offer spread ??? No one mention this until it got my policy doc.

That's 7.25% fee + monthly?? Or I'm I not getting it?

Surely I would be better creating a self directed pension? Can I do this and still get tax benefit as PAYE?

Thanks,


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## Gordon Gekko (11 Mar 2015)

Laughably high fees.

Allocation should be 100%, there should be no policy fee, there should be no encashment penalties, there should be no bid offer spread and the management fee should be 1%.


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## mrbrian (11 Mar 2015)

I'm afraid I'm not laughing !! 
Thankfully I've read my documents (arrived today) and googled up. 

Anybody know where I stand cancelling this? I'm a little cheesed off about the spread fee - first I heard of it was the policy doc.


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## mrbrian (11 Mar 2015)

Just to be clear, does a 5% bid offer spread mean I will lose 5% when I try catching out when 65? Effectively a hidden 5% fee?


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## mrbrian (11 Mar 2015)

T-B-M said:


> This may help http://www.consumerhelp.ie/personal-pension-prsas
> 
> Is there a cooling off period e.g. " When you take out a personal pension plan or PRSA, you can change your mind within 30 days. This is called a ‘cooling off' period." as per just before "How much should you contribute" section



Thank you. This is what I thought


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## Steven Barrett (12 Mar 2015)

mrbrian said:


> Just to be clear, does a 5% bid offer spread mean I will lose 5% when I try catching out when 65? Effectively a hidden 5% fee?



The bid/offer spread is you buy units at €1 and sell them for €0.95.

It's not the type of pension you set up, it's how you pay for it. If you choose to pay for the advisor by way of commission, you pay more. If you pay him by way of fee, you pay less.


Steven
www.bluewaterfp.ie


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## mrbrian (12 Mar 2015)

SBarrett said:


> The bid/offer spread is you buy units at €1 and sell them for €0.95.
> 
> It's not the type of pension you set up, it's how you pay for it. If you choose to pay for the advisor by way of commission, you pay more. If you pay him by way of fee, you pay less.
> 
> ...



Hi Steven,

Thanks for note. Just so I'm clear, this is not just limited to a 5 year period but over the term of the policy ie 30 years?


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## Steven Barrett (13 Mar 2015)

mrbrian said:


> Hi Steven,
> 
> Thanks for note. Just so I'm clear, this is not just limited to a 5 year period but over the term of the policy ie 30 years?



The bid/ offer spread? No, it's not limited to 5 years, it applies to every unit you buy with every contribution. There is a 5% difference between the buy and sell price on any given day. 

Not many contracts have a Bid/ Offer spread anymore. I know Zurich have it for one of their single premium contracts but I don't think they use it on their regular premium contracts. If they do, you should have a much higher allocation than 99%. 


Steven
www.bluewaterfp.ie


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## denisoleary (7 Apr 2015)

I just wanted to get your opinion on the following pension fees for a standard PRSA. Was quoted this today. Haven't signed up yet

98% Allocation Rate
2% Monthly Policy Fee
1% Management Fee

Thanks


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## Steven Barrett (7 Apr 2015)

denisoleary said:


> I just wanted to get your opinion on the following pension fees for a standard PRSA. Was quoted this today. Haven't signed up yet
> 
> 98% Allocation Rate
> 2% Monthly Policy Fee
> ...



Those fees are incorrect. 

It is either 96% allocation or 98% allocation. There is no monthly policy fee in PRSA's. 

It looks decent enough for a commission based PRSA contract (you could have 95% allocation). If you want 100% allocation rate, you can offer to pay the advisor a fee instead. The management charge of 1% is standard.


Steven
www.bluewaterfp.ie


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## denisoleary (7 Apr 2015)

Sorry my mistake. 98% Allocation, 1% Mgmt for actively managed pension. Id say ill go with it


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## eldiablo (9 Apr 2015)

Hello all,

I am reading these posts with interest as my husband is in the process of taking out a PRSA and the broker we spoke to recommended the New Ireland IRIS Lifesyle fund PRSA. We are novices in this area. I have a company pension and he was historically in the CWPS so we've never had to shop around for a pension before. We were offered Zurich as well but we chose New Ireland as they have performed well historically and they have appointed State Street as the investment manager. Rightly or wrongly this appealed to us over an in-house investment manager. He is 40 and is going to pay in €200 a month to begin with.

The charges the broker has quoted are;

5% premium charge
95% allocation rate
1% per annum management fee.

From looking online these seem to be the standard and maximum charges that can be imposed for a PRSA. I would just like some guidance on whether these seem reasonable considering the amount of the contributions etc or if we should keep shopping around and possibly get a better quote elsewhere.

Any feedback you could provide is much appreciated.

Many thanks.


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## Steven Barrett (9 Apr 2015)

That's the standard fee for a commission based contract. If you want to pay a fee instead, you can get the 5% premium charge waived and the allocation rate up to 100%.

Steven
www.bluewaterfp.ie


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## Protocol (9 Apr 2015)

Eldiablo,

In my opinion those fees are very high, in common with many pension fees in Ireland.

You should be looking for 100% allocation, all your premium going into the fund, with a 1% annual AMC on the fund.

This means you save 200 *12 = 2400pa, and the fee is 24 off the fund value, before growth.

Now, obviously, 24 is too little to pay for the set-up of the pension, so you'd have to pay an upfront fixed fee as well.


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## eldiablo (10 Apr 2015)

Thank you very much both of you, that is really helpful. Could I ask what would be considered a reasonable fixed fee to pay up front?  We have nothing to compare it to so would like to get an idea of what is fair. That certainly sounds like a better option than losing the contribtions and the performance for such a long period.

Many thanks again.


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## Steven Barrett (10 Apr 2015)

The commission the advisor will be getting is 15%. For a €200 per month contribution, he will be getting €360. For a premium of €200 per month, that is about the level of fee you should pay. 

You will also have to pay for ongoing advice. Financial advice is a heavily regulated industry, so as well as paying for the advice he gives you over the year, he also has a number of levies, charges and insurance to pay just to have you on his books.  This fee can be paid through a higher annual management charge or on a fee basis. You need to discuss it with your advisor. 

Steven
www.bluewaterfp.ie


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