# PRSA charges feedback please?



## John Lingua (13 Sep 2015)

Hi, I'm close to going ahead with a company PRSA with Zurich, standard funds, no investment advice included. The offer details are in Italics below. From what I've understood from posts I've, the fees I will pay are acceptable. I am correct?
Also, considering that I will controbute 1400 per month, any thought on looking to pay the advisor a fee for the work done and get a lower annual management fee? Any way of increasing allocation rate from 98%?

_Take for example one months contribution of €1,400 and let's assume for illustration purposes that there is no growth/ loss on your contribution or inflation during this month._

_So you contribute €1,400_
_it has an allocation rate of 98%_
_therefore €1,372 is used to purchase units in the fund(s) of your choice ( ie the Default Funds ). A reduction of €28 or 2%._
_the annual management charge on your plan is 1%...or 0.08% per month ( 1%/12 ). We deduct our charges on a monthly basis._
_So the effect of the annual management charge is €1,372 * 0.08% = €1.10 per month_
_So if there is a situation where no growth or loss occurs in the month, and we ignore inflation, then the effect of the charges on your investment is to reduce your contribution of €1,400 per month to €1,370.90 per month... or by €29.10._


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## Steven Barrett (13 Sep 2015)

The AMC is taken on the value of your fund, not the premium paid

1% is the standard rate for a PRSA. They are very expensive pension plans to run from a compliance and reporting point of view, so you have to pay for all of that. 

As your advisor if he is willing to work on a fee basis instead, you should be able to get 100% allocation with 1% AMC . 

For advisors, the initial commission paid can be clawed back in the first 5 years if the client reduces or stops his premium in that period. With people moving jobs a lot more or with costs being cut, it is very likely that there will be a commission claw back. 


Steven
www.bluewaterfp.ie


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## Pat Redmond (2 Oct 2015)

John Lingua said:


> Hi, I'm close to going ahead with a company PRSA with Zurich, standard funds, no investment advice included. The offer details are in Italics below. From what I've understood from posts I've, the fees I will pay are acceptable. I am correct?
> Also, considering that I will controbute 1400 per month, any thought on looking to pay the advisor a fee for the work done and get a lower annual management fee? Any way of increasing allocation rate from 98%?
> 
> _Take for example one months contribution of €1,400 and let's assume for illustration purposes that there is no growth/ loss on your contribution or inflation during this month._
> ...


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## GSheehy (21 Oct 2015)

John,

If it's an 'execution only' (no advice) service on  a Zurich PRSA you're looking for you can get 100% allocation, 1% AMC and no Fee.


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## John Lingua (4 Nov 2015)

GSheehy said:


> John,
> 
> If it's an 'execution only' (no advice) service on  a Zurich PRSA you're looking for you can get 100% allocation, 1% AMC and no Fee.



Thanks to both of you for the advice. My company's PRSA (Zurich) wouldn't increase the allocation to 98%, so I went to a broker, who said that he could offer me an 'execution only' (no advice) service on  a Zurich PRSA with 100% allocation, 1% AMC and a one-off 200 euro fee. 

I'm happy with this, but just wanted to be sure that I'm not in any way constrained by going through a broker. Have you any advice in terms of things for me to check with the broker prior to going ahead?

Thanks,

John


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## Steven Barrett (4 Nov 2015)

Execution only is you tell the broker the company and funds that you want to invest in. €200 set up fee is very cheap. 

I can't see how you would be constrained in going through a broker on this, he's not giving you any advice or steering you in a certain direction, you are doing everything yourself. 


Steven
www.bluewaterfp.ie


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## John Lingua (6 Nov 2015)

SBarrett said:


> Execution only is you tell the broker the company and funds that you want to invest in. €200 set up fee is very cheap.
> 
> I can't see how you would be constrained in going through a broker on this, he's not giving you any advice or steering you in a certain direction, you are doing everything yourself.
> 
> ...


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## Steven Barrett (7 Nov 2015)

The flexibility of PRSA's is a bit of a myth (something I am going to write about in the next few weeks). Always go with the lower AMC, so if he can get you a pension for €200 with a low AMC and 100% allocation, bite his hand off. He's doing it at a loss. 

Technically, he is no longer doing it on an execution only basis as he has advised you to take a personal pension. But that is his compliance issue and not yours. 


Steven
www.bluewaterfp.ie


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## EGavigan (26 Nov 2015)

For that monthly contribution and as long as you are at least 10 years from your normal retirement age (max 65) you can get a PRSA or a Personal Pension with 100% allocation, 1% management charge, full advice, no upfront fee and better fund choice.


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## oysterman (1 Dec 2015)

SBarrett said:


> The flexibility of PRSA's is a bit of a myth (something I am going to write about in the next few weeks).Steven


This is something that bugs me; specifically that, unless I'm mistaken, you can't take PRSA (AVC) benefits until you take your main scheme benefits.

For example: worker wants to retire early but would suffer actuarial reduction on main scheme benefits if he/she draws them down before normal retirement age. It would surely be in the public interest that they could draw down some of their PRSA fund to tide them over until retirement age (provided that the usual maximum drawdown limit to prevent retirement income falling below statutory threshold as a result of drawdown is observed). But they can't access their PRSA so they can't retire. The accumulated fund is only accessible when they get their main scheme benefits i.e. at the point when it ceases to be of as much benefit.

By all means don't allow tax-free lump sum drawdown until normal retirement age (I can see the public policy argument for not incentivising the spending of lump sum benefits in the manner of ongoing income) but the PRSA fund is the property of the worker who would be willing to give up their job, freeing up a vacancy for a younger person, and yet they are forced to stay on until the bitter end. Where is the public interest in this? Or am I missing something?


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## Steven Barrett (1 Dec 2015)

AVC's are always linked to the main scheme and are subject to their rules. But I agree, if you take early retirement, there is no reason why you shouldn't be able to draw down the AVC's.

I'm talking about if you set up a personal PRSA and contribute to it for a number of years. If you move job and the new company has an employer paid PRSA scheme, you can't just bring your existing PRSA into the scheme. You have to join the employer paid PRSA scheme.

I'll research it a bit more because I have to brush up on the the mechanics of the transferability of them. When I write my blog post, I'll post it up here too. 

Steven
www.bluewaterfp.ie


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## oysterman (2 Dec 2015)

Your point is well made, Steven. In an era of increased employee mobility it's very difficult to persuade a young worker, who may only intend staying in a particular job for a year or two, to join even employer funded schemes if the ultimate effect is going to be a multiplicity of small pension pots around the place. Far more tempting for the worker to wait until they get 'settled' in a job...which is more and more unlikely to ever really happen. Portability and transparent charging are the keys to unlock pension coverage, but both will require mindset changes from the industry.


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