# Pension Fees



## Lobby (26 Oct 2007)

My accountant has advised me to put some of my tax into a pension asap. He recommends a Standard Life Manager of Manager funds (Balanced Multi-Manager). From looking on the web it seems to have performed fine over its last two years (only started 2 yrs ago). 

My question is though: how do the fees etc. compare:

96.5% of contribution invested
Mgt Fees 1.35% p.a. (slightly above normal to account for extra layer of Managers - as its a manager of managers fund)
Commission of 5%


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## ClubMan (26 Oct 2007)

Lobby said:


> My accountant has advised me to put some of my tax into a pension asap. He recommends a Standard Life Manager of Manager funds (Balanced Multi-Manager). From looking on the web it seems to have performed fine over its last two years (only started 2 yrs ago).


Past performance is no guide to future returns. Why is your accountant recommending this specific pension provider and product/fund?


> My question is though: how do the fees etc. compare:
> 
> 96.5% of contribution invested
> Mgt Fees 1.35% p.a. (slightly above normal to account for extra layer of Managers - as its a manager of managers fund)
> Commission of 5%


 Those charges sound high to me on the face of things. Especially when you should be able to get a pension with no charges other than an annual management charge of c. 1% easily enough (e.g. through a discount broker).  Just read a few of the many existing threads on pensions and charges. Of course if you can identify tangible benefits accruing from higher charges then maybe they are justified but I would be skeptical about the charges above being worth it.


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## neiltheseal (26 Oct 2007)

The management fee looks a bit high. I have one with New Ireland and it's .75% but it depends on the fund. There are some more specialist funds which have fees between 1 and 1.5%

My allocation/spread with New Ireland is 95%/5% so yours looks better.

The commission is the thing which gets me. I spoke to New Ireland and they told me that the regulator requires them to use a broker so you have to go through a broker and pay the commission.

I wish there was a direct pension provider which you could get like Rabodirect or Quinn Life which didn't require you to go through a broker. Anyone have any ideas on that?

Neil


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## Lobby (26 Oct 2007)

Thanks Clubman. 

Yep, I'm aware of the past performance bit but the fund seems to have a good spread across various sectors - though I accept that this can smooth out gains as easily as reducing losses.

It was more the fees I was questioning and you confrimed what I had thought to myself.


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## ClubMan (26 Oct 2007)

neiltheseal said:


> My allocation/spread with New Ireland is 95%/5% so yours looks better.


You mean 10% of each contribution is going on charges!?!  Crazy!


> I wish there was a direct pension provider which you could get like Rabodirect or Quinn Life which didn't require you to go through a broker. Anyone have any ideas on that?


Yes - _QL _for example. They only sell direct and not through brokers. But you can also get pensions/_PRSAs _with just an annual management charge of c. 1% and no other charges through discount execution only brokers. There are loads of threads on this already.


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## neiltheseal (26 Oct 2007)

Thanks clubman. I just called Quinn life and found out about the 100% allocation and no commission. I'll check the other threads. 10% certainly is crazy.


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## F. Kruger (26 Oct 2007)

The allocation rate and commission charge quoted by Lobby would indicate that there are also exit penalties on this contract. So if Lobby wanted to transfer this fund to another provider in the first few years, they would get hit with a penalty.

I presume that the accountant is the advisor is this case and that is they who will be receiving the commission. Are they offsetting this commission against your accountancy fees or is the 5% in addition to your normal fees? 

The management charge quoted is correct for this fund, so there is no 'trailer' commission attached.  

Some Brokers do sell Quinn Life Products and would charge a fee for setting it up or for any advice that might go along with the transaction.


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## Lobby (26 Oct 2007)

F. Kruger said:


> The allocation rate and commission charge quoted by Lobby would indicate that there are also exit penalties on this contract. So if Lobby wanted to transfer this fund to another provider in the first few years, they would get hit with a penalty.
> 
> I presume that the accountant is the advisor is this case and that is they who will be receiving the commission. Are they offsetting this commission against your accountancy fees or is the 5% in addition to your normal fees?
> 
> ...


 
Yes, the accountant is the advisor and I'm not aware that they are offsetting any commission against the tax return charges.


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## webtax (26 Oct 2007)

Lobby said:


> Yes, the accountant is the advisor and I'm not aware that they are offsetting any commission against the tax return charges.



Why not ask him how much commission he is earning from you and if he is happy he is giving you independent advice and the best deal available?
i would go the quinn life route as suggested by others, but do your own research before making a decision.


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## shaking (26 Oct 2007)

at this time of the year most life companies offer enhanced allocation rates to secure pension business. In the case of Standard Life they are offering 1%, it sounds like your accountant isn't passing the benefit of this on to you either. There are options with various life companies where you will get 100% allocation (depending on the size of your contribution) and the broker will still get 1% commission, you shouldn't have to settle for 96.5% allocation


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## ClubMan (26 Oct 2007)

F. Kruger said:


> Some Brokers do sell Quinn Life Products and would charge a fee for setting it up or for any advice that might go along with the transaction.


I still find this confusing - their bumpf says they don't "use" (although the term used may be different) brokers but you (and I have no reason to doubt you!) say otherwise. I think we discussed this in another thread. Either way my main point above is that you can get better (e.g. 0%/1% style) pension charges deals elsewhere - e.g. direct or through discount brokers.


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## boaber (26 Oct 2007)

neiltheseal said:


> The management fee looks a bit high. I have one with New Ireland and it's .75% but it depends on the fund. There are some more specialist funds which have fees between 1 and 1.5%Neil



The management fee on Manager of Managers funds is higher becuase the MoM employs a sophisticated investment approach which builds up a portfolio of specially selected investment managers from around world. Through a  vigorous manager selection and monitoring process, the MoM undertakes the burden of researching, hiring and observing daily each manager. The overriding
purpose of this structure is to reduce risk so that clients may meet their financial objectives. 

It is claimed that the Manager-of-Managers approach produces a superior investment solution that is designed to reduce volatility and produce more consistent performance.


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## ClubMan (26 Oct 2007)

Chances are this "sophisticated investment approach" will not outperform the index over the long term. No offence but your post reads like something lifted straight from their advertising brochures.


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## boaber (26 Oct 2007)

None taken - it was!!


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