# A.V.C -High cost start up?



## sunlife (14 May 2007)

Hi all, I recently set up my A.V.C fund and my other half was very surprised to see that it incurred a €500 set up charge and also 1% taken off each contribution and I think 5% a year also.....I got it through my union (Primary teacher) , whose rep asssured me this was great for tax benefits/incentive etc. I know the A.V.C makes up for years you my want to "buy back" if_ want to retire early_ but am I really getting a good deal??? Shed some light on my situation any information appreciated.
Thanks


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## Protocol (14 May 2007)

*Re: A.V.C -High cost start up??*

I think you got a bad deal.  You could set up an AVC with the following terms:

Set-up cost: 150-250 euro
Charges on contributions: 0% (not the 5% you pay)
Annual mgt charge: 1% (same as you)


Teachers and nurses have been getting a bad deal from Cornmarket brokers for years and years. And yet their unions don't seem to do anything about it?

Search AAM for other threads about Cornmarket.


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## sunlife (14 May 2007)

*Re: A.V.C -High cost start up??*

Thanks Protocol,
I wonder is there anywhere else I could set up my A.V.C's with? 
Can I cancel..do yuo have any advice as to what I should do....


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## F. Kruger (15 May 2007)

*Re: A.V.C -High cost start up??*

Sunlife,

You can set up an Eagle Star AVC PRSA with just the 1% Annual Management Charge on www.prsas.ie . No other set-up cost.

I do not think that your employr will allow you to pay it by salary deduction, as they already offer the facility through someone else, but you could pay it by DDM and 'manually' claim the reliefs.

(Interest in site, already declared.)


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## sunlife (15 May 2007)

Thanks F.Kruger,I feel like I've been burnt..I think I'm going to ring back the broker and roast him and try cancel it..he told me he was independent and totally unbiased...


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## F. Kruger (16 May 2007)

Sunlife,

There is a difference in the 'Execution Only' service that the website offers and the 'Advisory' service that you are receiving from Broker.

If you need 'independent' advice you will have to pay something for it.


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## Marathon Man (17 May 2007)

There are several threads on this site dealing with Cornmarket/Woodchester, including a few by me.  My wife (ASTI) now has her own PRSA AVC, paid through current a/c and claiming back PAYE & PRSI.  The PRSA is going since April '06 and so far, so good.

Having moved from Cornmarket, we're not 'au fait' with current charges, but your setup costs look "good" - they used to be of the order of €832.

There is another charge that is not down to Cornmarket, that is a 1% collection charge levied by the Dept. of Ed.  I believe that this is charged for AVCs collected by other depts also.  This charge has nothing to do with the provider.   

Then there is the 5% charged on each contribution.  Finally the Annual Management Fee is applied. The default fund is the Consensus Fund.  This used to carry a management fee of 1.75% (this may have been reduced to 1% in the past few months).  

This brings your overall deductions to nearly 8% on your annual contribution.  If your fund is returning 11%, then your real return is only 3%.  In the 10 years before retirement, your fund, unless you stipulate otherwise, will be progressively converted into cash, with a lower, though less risky, return, so your real return is very poor.


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## liquidcool (18 May 2007)

Set


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## liquidcool (18 May 2007)

Set up costs are tax deductable. Also the charges are in line with Public Sector PRSAs......does the 0% contribution on the Eagle Star PRSA come with 100% Allocation?


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## extopia (18 May 2007)

Those charges are indeed outrageous. Not counting the set up charges, looks like the fund has to make 6% for you to break even! (Some financial institutions think you won't care about this because of the tax breaks you may be getting).

What sort of return is the fund showing, out of curiosity?


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## liquidcool (18 May 2007)

The Cornmarket Broker will come to your house at any time to suit you. Explain Superannuation and then you have retirement advice regarding how to use your AVC when you approach retirement.....not bad for 495euro set up fee which you get tax relief on so really is aobut 260euro. Not sure what the returns are doing on the funds at the moment.


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## LDFerguson (19 May 2007)

Hi liquidcool, 

Can you advise if you have any connection with Cornmarket?



> The Cornmarket Broker will come to your house at any time to suit you. Explain Superannuation...


 
If you don't want someone calling to your house and already understand Superannuation, will they reduce the fee?



> ... and then you have retirement advice regarding how to use your AVC when you approach retirement


 
Do Cornmarket explicitly state that retirement advice is included in the original €495 fee?


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## Warren (19 May 2007)

extopia said:


> Those charges are indeed outrageous. Not counting the set up charges, looks like the fund has to make 6% for you to break even! (Some financial institutions think you won't care about this because of the tax breaks you may be getting).



Im also looking at the Cornmarket AVC at the moment as my wife signed up a number of years back w/o paying too much attention to exactly what she was signing up for. Its unbelievable - 4 years on and its still not worth what she's put in, and all this during a period of pretty good stock market returns.
What she really wanted was the Notional Purchase Service but didnt realise that, we're now considering signing up for that and possibly opening a seperate PRSA as well (even with the NPS Im pretty sure she wont have 40 years service by the time she retires, she's hoping to take a career break along the way at some point). We'll need to talk to someone about it first as Im not comfortable making that decision without professional advice (dont know how to find that person though without them trying to sell us something else)


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## aircobra19 (20 May 2007)

Would the Notional Purchase Service give a better return for the money you put in though?

Theres another thread on this here
http://www.askaboutmoney.com/showthread.php?t=6385


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## Warren (20 May 2007)

aircobra19 said:


> Would the Notional Purchase Service give a better return for the money you put in though?
> 
> Theres another thread on this here
> http://www.askaboutmoney.com/showthread.php?t=6385





That I'm not sure of but I don't think its actually possible to exactly quantify that. I guess a qualified financial advisor might be able to make an educated guess.
The value of the Notional Service Purchase will depend on my wife's final salary which is currently unknown. From what I understand the best way to guestimate this is to take an assumed % increase p.a. to her salary to get her possible final salary. The potential value of an AVC requires assumptions to be made on investment performance and future annuity rates.

The way I'm looking at it right now if the contribution rates to the NSP and AVC are almost identical to gain the same benefit then the NSP is a better bet as its guaranteed.....


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## Guest126 (20 May 2007)

Hi Warren

It is most likely that the Notional Service would be the best deal for your wife.

The guarantee is hard to beat - and with increasing life expectancy and therefore annuity rates moving against your wife...the security of this guarantee is a big plus.

It would be possible to run off comparison figures to show the various scenarios under which one may be better than the other - for example, with a 15% investment return (not likely) the AVC option would appear better!


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