# Avc- Cornmarket vs Zurich



## johnmurf83 (14 Jul 2017)

I have an avc currently with Cornmarket. I was recently approached by a broker from PSRA, who claim to be an independent financial advisor, although I know myself they are not independent in the truest sense of the word. They want me to change over my avc from Cornmarket to Zurich Rebate Scheme. He claims I will pay significantly less fees if I move, as Zurich will rebate the annual management charge as long as I continue to contribute a minimum of €25 per month for the life of the pension. Both Cornmarket and Zurich charge entry fees of 5%. Anyone have experience of either or can offer any advice as regards the pros and cons. I know the entry fees are high with both. The obvious incentive for me is the 40% government contribution from my tax €€€s. I should add I am a public servant in my mid thirties.


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## Steven Barrett (17 Jul 2017)

Those rebate plans are a waste of time, especially being young as almost no one maintains pension payments for an entire working lifetime, even if your intention is to do so. Looking at the annual management fee of that product, the charge is 1.75%, significantly higher than what even Cornmarket are charging. 


By the way, The Central Bank's definition of independent is that he offers to do this work on a fee basis as well as commission basis. If he didn't offer you the option of a fee, he is not independent. The number of agencies he holds has is irrelevant. 


Steven
www.bluewaterfp.ie


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## johnmurf83 (17 Jul 2017)

Thanks for your reply. Just one more question, in terms of the rebate, if you adhere to the conditions and are entitled to the rebate, do they just refund 1.75% of the original sum invested or do they allow you to keep the money that has been made as a result of the investment also.


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## johnmurf83 (17 Jul 2017)

Just to clarify, do I get the benefit of the compound interest / gain that the 1.75% would potentially make over the years?


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## Bro Cass (23 Jan 2020)

Apologies for reviving an an old thread, but I have been offered a similar product through Zurich which seems reasonable.

Allocation is 95% and fee is 1%. Allocation is refunded after 15 years, and financial advice is available.

Is there an obvious catch?

Could anyone explain why people tend not to stick with the 15?

Would you be better off going with an execution only discount broker if you knew how to manage the fund yourself?

small print:

*Refund of management charges
In the case of the Advice PRSA (Rebate) only, if you take your retirement benefits on or after your selected retirement date, your selected retirement date is at least 15 years after the start date, and you did not cease making contributions during any 13-month period, we will increase the benefit payable by refunding any management charges deducted from your contract in respect of regular contributions since the start date. We will not refund any additional management charges levied on certain funds*


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## Protocol (23 Jan 2020)

Why would anybody pay a 5% contribution charge, on each and every contribution, when the same AVC is available elsewhere with a 100% allocation / 0% contribution charge?

Use a discount broker, buy the same AVC, avoid fees, there is a small but more paperwork.

There is no "fund management" involved.


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## Bro Cass (3 Feb 2020)

Thanks for comments so far. Can I just clarify the type of pension I'm supposed to get before I sign up to anything.

I am a Public Servant with years of service missing and I wish to top up my pension. The product offered to me from the salesman was an Zurich Advice PRSA, but I want to go with the Zurich PRSA AVC from discount broker instead. Is this what I'm looking for? 

I just want to make sure I'm doing it right, as the discount broker cannot offer advice.


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## GSheehy (3 Feb 2020)

@Bro Cass

There's a Standard PRSA AVC and an Advice (non-Standard) PRSA AVC available via Zurich LIfe

You can buy either of them online with 100% allocation and a 1% AMC so they both fit the transaction that you want to do.

The only customers I've seen that elect for the 'execution only' non-Standard product are those that wanted access to the Indexed TopTech 100 Fund or Irish Equity Fund at the 1% AMC (they're not availabe on the Standard product).

There are 9 additional funds availble on the non-Standard PRSA but I can't recall anyone buying the product specifically to access any of those 9 funds because they are more expensive than the 1% AMC.


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## Smoneen (3 Feb 2020)

Bro Cass said:


> Apologies for reviving an an old thread, but I have been offered a similar product through Zurich which seems reasonable.
> 
> Allocation is 95% and fee is 1%. Allocation is refunded after 15 years, and financial advice is available.
> 
> ...


The amc on the rebate product is 1.75%. Comparing the 100% allocation & 1% amc option to the 95% allocation and 1.75% amc plan with the rebate you are projected to end up slightly ahead on the rebate plan after 20 years. 

For the comparison I used a 20 year term, 100pm level premium (not increasing annually), 4.2% growth rate. Once the projected rebate is applied is gives a slightly higher projected value to the tune of €400 over the standard PRSA at the end of 20 years.

Just some info to consider. If you’re looking for an AVC & your employment is public sector related I’d consider evaluating the advice route again. Unfortunately you can’t project for the value that good advice provides.


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## Gordon Gekko (3 Feb 2020)

Smoneen said:


> The amc on the rebate product is 1.75%. Comparing the 100% allocation & 1% amc option to the 95% allocation and 1.75% amc plan with the rebate you are projected to end up slightly ahead on the rebate plan after 20 years



How can that be the case?


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## Smoneen (3 Feb 2020)

Gordon Gekko said:


> How can that be the case?


STD PRSA 100pm level premium, 100% alloc, 1% amc gives projected value of €31318.51 after 20 years

On the rebate plan, 95% alloc, 1.75% amc, all other terms matching, projected value is €31,792.13. Notes say it includes the projected value of the rebate.

I would always have jumped on the 100% alloc bandwagon previously but have been looking a lot at the effect of compounding amc recently. For regular premiums a higher amc (in this case the 1% as the 1.75% is rebated) with a higher allocation (100 vs 95) will always provide a lower projected value than the lower amc & lower allocation where the term is 15 years +
100% alloc with 1.5% amc also does worse over the same duration than 95% and 1%.

For this one I think the questions to be considered:
1: how long can you reasonably expect to make payments?
2: how much do you value advice?


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## Gordon Gekko (4 Feb 2020)

You hadn’t made it entirely clear. So is the below effectively correct?

- 1% AMC plus 100% allocation
- Nil AMC plus 95% allocation and the 5% back at the end


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## Smoneen (4 Feb 2020)

No, the way the rebate plan works is set up is 95% allocation and 1.75% amc. After 15 years (assuming premiums are paid for 15 years) the 1.75% that has been deducted is credited back to the PRSA account.
The projections show the effect of the credit of the rebate at year 20


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## Steven Barrett (4 Feb 2020)

Smoneen said:


> No, the way the rebate plan works is set up is 95% allocation and 1.75% amc. After 15 years (assuming premiums are paid for 15 years) the 1.75% that has been deducted is credited back to the PRSA account.
> The projections show the effect of the credit of the rebate at year 20



Those rebate plans are rubbish. Too much can happen in a persons life in 15 years to be sure that you will continue paying into a plan for that long. Relying on a bonus that far out against the certainty of lower fees now is not a good bet to make. 

Steven
www.bluewaterfp.ie


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## Smoneen (4 Feb 2020)

I’m an advocate of giving someone the complete picture so that they can make their own informed decision


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## Bro Cass (4 Feb 2020)

Smoneen said:


> No, the way the rebate plan works is set up is 95% allocation and 1.75% amc. After 15 years (assuming premiums are paid for 15 years) the 1.75% that has been deducted is credited back to the PRSA account.
> The projections show the effect of the credit of the rebate at year 20


 

The way it was pitched to me was that the 5% is reimbursed, so it ends up being the same as a 100% allocation. I asked him this several times. But even looking at the small print which I posted myself at the beginning I see that it is the management charge refunded.

*we will increase the benefit payable by refunding any management charges deducted*


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## Live Well (4 Feb 2020)

Bro Cass said:


> *Refund of management charges*
> In the case of the Advice PRSA (Rebate) only, if you take your retirement benefits on or after your selected retirement date, your selected retirement date is at least 15 years after the start date, and *you did not cease making contributions during any 13-month period, *we will increase the benefit payable by refunding any management charges deducted from your contract in respect of regular contributions since the start date. We will not refund any additional management charges levied on certain funds



So you cannot miss a single payment for 15 years, is that the catch?


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## Djosci (14 May 2020)

I have been offered the rebate 95.75% allocation + management charge 1.75% after 15 years rebate to work out at an effective rate of 0.8%. Must put in minimum of 300 a year for 15 years to get this. Have any signed up to this type with Zurich.


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## Steven Barrett (14 May 2020)

Djosci said:


> I have been offered the rebate 95.75% allocation + management charge 1.75% after 15 years rebate to work out at an effective rate of 0.8%. Must put in minimum of 300 a year for 15 years to get this. Have any signed up to this type with Zurich.



Run away fast. 1.75% a year!!!! If you don't maintain 15 years premium, do you get your rebate? Unlikely. (I know I'm an advisor and should know these things but I've better things to be doing than reading the hidden bits on products I will never use). 

Look at what is happening with the coronavirus and the shut down. I've had clients 2/3 months into their pension policy and they had to stop paying premiums. It was never their intention that they'd have to stop their contributions. There could be lots of unknown circumstances in the next 15 years that means you have to stop your contribution of even reduce it below €300 a month. 

This is nothing more than the sales person trying to maximise the commission available to them by selling you something. They are not giving you good advice. 


Steven
www.bluewaterfp.ie


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