# PRSAs + Consumer Choice



## ClubMan (12 Sep 2003)

In the September edition of Consumer Choice, all the Standard PRSAs on the market were analysed. 

Consumer Choice assessed all the Standard PRSAs in the market under the categories: investment flexibility, strategy review and performance; contribution flexibility; bonuses and rewards. Each time a PRSA got a favourable mention under a category, it was awarded one point.

```
Table 1: Consumer Choice Standard PRSA Rankings

[u]Company[/u]           [u]Points[/u]

Eagle Star        5
New Ireland       4
Bank of Ireland   4
Canada Life       3
Friends First     3
Irish Life        3
Hibernian         2
EBS               1
Ark Life          0

Survey conducted 8 July 2003
```


----------



## Brendan Burgess (13 Sep 2003)

I read the review and found it very difficult to understand.

Eagle Star gets an extra point because they accept cash contributions????? I really find it hard to believe that this will be of interest to many people.

Eagle Star and New Ireland/Bank of Ireland seem to get more points from past performance. It's not at all obvious why this should be so.

I find them very difficult to distinguish between. 

The biggest difference between the different standard prsas is the fact that you can save the initial 5% charge by going via a discount broker. 

Another big difference is some will try to switch their customers into the non-standard PRSAs which earn higher fees for the provider. 

We went for the AIB one at work, because we bank with AIB and they tend to look after us for mortgages and other banking requirements. The difference wasn't sufficient enough to go through a discount broker and anyway, I don't think that there will be much take up. 

Brendan


----------



## Laser (13 Sep 2003)

*Brendan's Choice*

Jeez Brendan, that's a real poopy choice - the worst asset managers for mixed funds since they opened for business- but maybe you're trying to teach your staff a lesson!

As for the Consumer rag mag, they're better informed, and the ability to deal on line for PRSA's is a deciding factor in choosing Eagle Star.


----------



## Brendan Burgess (13 Sep 2003)

*Re: Brendan's Choice*

Dealing online could well be a deciding factor as there is little else to choose between the products. What exactly does this mean in the PRSA context? As far as I understand it, we will deduct money from people's salary and pay it over to the PRSA provider. I don't see where dealing online comes in?

Maybe there is online access to valuations or something?

The past performance issue has been dealt with extensively on this site and elsewhere, so I won't discuss it again except to say that if you think it matters, you would be correct to avoid AIB. You should choose Bank of Ireland, or Standard Life or Eagle Star or New Ireland or EBS or ... They all claim to be the best past performers.

Brendan

Brendan


----------



## Gary (15 Sep 2003)

*The Banker Awards*

Just a thought. 

5% on every regular contribution throughout the whole life of the PRSA... service must be good because thats a hell of a good tip. Employees may not be as understanding when they finally fathom the true cost of such an allegiance in the years to come.


----------



## ClubMan (15 Sep 2003)

*Re: The Banker Awards*

You might also be interested in  about PRSA charges.


----------



## Savvy (16 Sep 2003)

*Founder of AAM backs AIB PRSA*

Brendan, can we use that?  _(declared interest:  I'm an employee of AIB)_

Eagle Star got their five points as follows:

1.  Past Performance (and then the article goes on to emphasise, as does IFSRA, that past performance is irrelevant and in fact warns consumers to beware of people promoting PRSAs on the basis of PP.

2. Cash contribution facility.

3. Quarterly and half yearly facility.

4.  No notice needed to change contributions (Ark require 14 days' notice).

5.  For (very) high contributions there is a slightly reduced charge.

This hardly merits the highly publicised "5 - Nil" score.  The fact is that there is not much difference between Standard PRSAs.  What employers must be very alert to is the possibility that their chosen PRSA provider will in fact use the access to their employees as a Trojan horse to sell the much more lucrative (for them) and higher charge Non standard PRSAs.  

With AIB, employers can be absolutely reassured on that score.  AIB spurned the facility of Non standard PRSAs from the beginning.


----------



## Brendan Burgess (16 Sep 2003)

*Re: Founder of AAM backs AIB PRSA*

Savvy

I think that Consumer Choice have been highly critical of non-standard PRSAs. If so, they should have awarded points to suppliers who don't provide them.

Brendan


----------



## Laser (16 Sep 2003)

*Savvy's AIB-Speak*

Savvy, the sparks in the Ark, don't give valuations on line, and have had crummy asset performance for 10 years, failing to pick up any decent market share. Now share is slipping and the boys in Ballsbridge want answers, like buying a broker Life Office.

As for the high ground taken by the Ark, give us a break. AIB's sales methods are high pressure, including breaches of the CCA for contingent sales with credit products. The Ark has also targeted a lot of elderly deposit holders for sales of managed funds, and continues to target customers based on private information that it shouldn't be getting about peoples banking. AIB was also the single biggest seller of illegal non-resident deposit accounts.

So enough of the bull from the Ark, and a little more realism, huh?


----------



## Caius Martius (16 Sep 2003)

*Savvy's AIB-Speak*

Savvy,

Do take the time to cast your eye over the offerings from the other life offices who have scored well in the above survey. Rumour has it that you have alot of time on your hands these days.

Then, and only then, will you be qualified to pass judgement.


----------



## Brendan Burgess (16 Sep 2003)

*Re: Savvy's AIB-Speak*

Laser

What does "dealing online for a PRSA" mean in the context of Eagle Star? Does it mean getting valuations online? That's nice, but it hardly swings it for the product. The Consumer Choice survey gave 20% of its marks for this facility, which is totally disproportionate. 

It gave another 20% for the ability to deal in cash, which would be worth a lot to some people, but only a very, very few.

I don't know who got marks for past performance - most would agree that it's irrelevant and deserves no marks.

I would deduct a point for the existence of sub-standard PRSAs in the same stable in case they are cross sold. 

In reality, there is very little difference between the products. The biggest difference is charges and, as such, they should give extra points for the ability to save by going through a discount broker. 

Brendan


----------



## Laser (17 Sep 2003)

*Brennies View*

Wrong Brendan. Selling the stuff is the easy bit, and they're all the same, but what about the 30 or 40 years thereafter? Ongoing access to valuations, fund reports, switches, variations in contributions, economic commentaries etc is pretty vital. Compare that to snail mail, shocking telesellers, customer service reps, technical chancers, bullshitting salesmen etc. 

Your comment coming from someone who has set up this site, beggars belief - or maybe you just didn't think it through? From an employer perspective on line is critical to eliminating rework and hassle - just tell the staffer to look up their account themselves.


----------



## ClubMan (17 Sep 2003)

*Non standard PRSAs haven't gone away you know*

*[Update 23Jun06 - I think that this was originally posted by Savvy but somehow got linked to my username! - ClubMan]*

Caius,

Believe me I have studied the various offerings in depth.  Not so much the Standard PRSAs as there is little to choose between them as Brendan has pointed out.  Otherwise I am sure CAI would have launched Savermark II but in its stead we get a rather poorly written and highly unscientific critique in Consumer Choice.

The questions all the others (except EBS and my own company, AIB) have to ask are:

1)  Why, oh why, did you introduce high charging Non standard PRSAs in the first place? How did you really hope to stand behind the  assertion that increased fund choice justified the substantially higher charges, even for those vast majority who would follow the Default Investment Strategy and never, ever avail of this spurious facility.

2) Why, oh why, oh why, when IFSRA torpedoed this cynical ruse on the 24th June do you still allow the Non standard PRSA facility?

I repeat that the greatest threat that PRSA employees face is the selling of Non standard PRSAs - remember the legal obligation of employers was to give access to a *Standard* PRSA.  All the transparency and declarations in the world are worth nought against the smooth talking salesperson and I don't just mean those who sell "smoothed" funds.

The life industry was given a virtual monopoly on this initiative.  Generous tax relief backed up by laws forcing employers to comply.  It is only right that the quid pro quo would be a regulated product.  What an awful shame that the Pensions Board caved into the insurance lobby and allowed an effectively non regulated alternative.

IFSRA have acted quickly and done well, within the legal constraints, to put an end to this travesty but I fear that Non standard PRSAs will remain with us so long as the life industry is left any wriggle room.


----------



## Caius Martius (17 Sep 2003)

*Standard PRSAs*

Savvy?????

The Survey was on Standard PRSAs. If you want to open another thread on Non-Standard then by all means do so.

From your in-depth knowledge, what is the difference between 

1. The default investment strategies of Ark and Eagle Star?
2. The funds available?


----------



## Savvy (17 Sep 2003)

*The importance of being Standard*

Caius,

The availability of Non standard PRSAs is extremely germane to any discussion on Standard PRSAs, especially in the context of compulsory employee access.

By law an employer must give its chosen provider access to its employees to sell *Standard* PRSAs.  But there is absolutely no requirement that the provider or its salespersons should actually promote Standard PRSAs, they are perfectly free to promote Non standard PRSAs provided, following IFSRA's directive, it is explained as being superior to the Standard version. (And of course no objective observer from IFSRA to CAI actually believes that.)

But the real danger is that these salespeople actually *do* believe that the Non standard versions are superior and (in Eagle Star's case) the threefold levels of initial commission are certainly an incentive to seek out such a rationale.

Eagle Star refer to their Non standard PRSA as the _Advice_ version.  Standard PRSAs they have positioned as non advice e.g. over the Internet.  Does the employer know in what guise an Eagle Star representative will be approaching its employees?  Will it be in _Advice_ mode and therefore charging 50% extra annual management charge or will it be within the spirit of what the employer signed up for, i.e. the provision of Standard PRSAs, possibly on the basis of a dubious 5-nil endorsement from the CAI?

This is no mere academic debate.  This is a pensions scandal in the making despite the timely intervention of IFSRA.

BTW, Caius, I have disclosed my interest, care to reciprocate?


----------



## Caius Martius (17 Sep 2003)

*In Depth Knowledge*

The lack of a reply to the basic questions above would imply that you have not bothered to check what the rest of the market is actually doing. Not untypical of all bank salesmen. 'The sales manager said it was the best, so it must be.' My local AIB managers reply to the above survey was that the CA 'had it in for AIB'.

My interest ; Someone who took the time to study all the Standard PRSAs and who didn't need Consumer Choice to tell them that Ark Life put as much thought into their PRSA as their fund managers do with getting out of the 'well below average' category.

Start a different thread on the non-standard issue and I will comment but please stop hiding behind it here.


----------



## Savvy (17 Sep 2003)

*Raw nerves*

Caius, the snide reaction suggests my points must be hitting the target.

CAI has given Eagle Star a ringing endorsement in this article.

Even within the confines of a discussion on Standard PRSAs this rating is wholly unscientific and OTT. Do you agree? (and please forget about your opinion of AIB for a moment in answering that) - is, for example, ES's offering 5 times better than EBS'?

The fact that this "halo" conferred by CAI on Eagle Star will more than likely be used to conceal sheep in wolves' clothing (i.e. flogging Non standard PRSAs) is IMHO perfectly acceptable commentary in this thread, whether you agree with it or not.  And surely you do accept that such a  possibility exists.


----------



## Caius Martius (17 Sep 2003)

*In Depth Knowledge*

Why did providers introduce non-standard PRSAs ? Possibly because the providers eventually realised that the higher charges ‘Personal Pensions’ market would become defunct and to compete with the Personal Pension products of direct providers. Have Ark made their ‘Personal & Company Pensions’ redundant? Standard Life have. They have introduced a competitive Non-Standard PRSA to compete for this market(personal pension).

IFSRA – The jury are still out on these guys as far as I am concerned. They are trying to be champions of the consumer and regulators of the providers and intermediaries. Eventually they will get there but they are on a steep learning curve. They are extremely pessimistic about everything at the moment,. as all bankers are.

The obligation was on employers to provide at least one Standard PRSA. You seem to be of the opinion that all employers will set up Standard and Non-Standard facilities. That’s daft. Maybe you think that the Non-Standard can be deducted under the Standard scheme. News to me if its possible. See this post   and in particular point 3.

Now. Back to your employers paltry offering.  Sell it to me. What has it going for it? Is it ‘state guaranteed’? What choices of investment funds does it have? Can I access valuations on line or this a bit of an embarrassment at present? Can I buy it without the 5% charge on contributions? Are there enhanced allocations for higher contributions? If I tell you now that I am funding for an Annuity as opposed to an ARF what different default investment strategies have you got or is it the ‘one cap fits all’ syndrome?   

And while you are doing your research you might explain why the Central Bank (of the time) introduced the word ‘cuckooing’ and made it illegal?


----------



## ClubMan (18 Sep 2003)

*Re: In Depth Knowledge*

*IFSRA – The jury are still out on these guys as far as I am concerned. They are trying to be champions of the consumer and regulators of the providers and intermediaries.*

On that specific issue - I made a complaint to them about what I suspected to be an unlicensed financial operation that was advertising in the local free newspapers. The reply I got was full of legal gobbledygook but confirmed that they were not licensed by the _IFSRA_ but might be licensed by the UK _FSA_ (I suspect that they are not as their website says nothing about _FSA_ authorisation) and left it open to me to pursue it indirectly (through the _IFSRA_) or directly with the _FSA_. I've since asked them to pursue this with the UK _FSA_ on my behalf. However I was very disappointed that the _IFSRA_ were not a bit more customer orientated (e.g. an explanation in plain English rather than legalese would have been a start) and proactive in relation a complaint such as this given that in the meantime some people might well be handing their cash over to an unregulated/unlicensed and possibly dodgy operation.


----------



## Caius (18 Sep 2003)

*PRSAs*

Caius, why did you revert to type with that last comment?  Otherwise (except for that "paltry" swipe) you made reasonably reasonable points in a reasonably reasonable tone and so I will honour you with a response. Say "thank you".  

Personal Pensions redundant yes.  Executive Pensions no as these can have superior tax breaks etc. to PRSAs.

I welcome the Standard Life approach. A bit ironic that it is the Standard who have put the human face on Non standard. :lol 

Here again the Pensions Board are in error though.  There should never have been any restrictions on the funds within Standard PRSAs other than for the DIS.  It gave the industry the perfect excuse to promote higher charge Non standard PRSAs.

Not having a Non standard PRSA, I admit to not being entirely aware of whether these can piggy back off a  Standard PRSA deduction facility.  If not then the likes of Eagle Star are caught by another dilemma.  They openly claim that their Advice Non standard PRSA is superior to their Standard version so are they by their own lights short changing their designated employers?  Indeed do they give any advice to employees on Standard PRSAs? We do and we don't charge any extra for it.

You know that no PRSAs are state guaranteed.  Why are you asking this question?

It has a choice of six funds, quite enough for anybody IMHO and just as much as on our Executive Pension plan.  A choice of umpteen funds is just another example of the self justifying pompous palaver we see these days.

Valuations on line?  Yep.

Without 5% contribution charge?  No.  BTW how does the Eagle Star rep justify selling a 5% charge Standard PRSA without advice when the same product and service is available on-line without the charge?

No enhanced allocations for higher contributions.  This is in line with the majority of companies and those which do give enhanced allocations only do so in a very limited way.

DIS tailored to an ARF or an Annuity?  You may or may not be aware that the whole issue of DIS strategy was and is a hot actuarial debate.  The majority actuarial consensus is, as with Ark Life, against making this differentiation.

I told you before why an employer should consider an Ark Life  Standard PRSA.  We *believe* in PRSAs.  We especially believe in Standard PRSAs.  David Went denounced most providers for "whinging" about PRSAs.  Strong language, but if you were an employer would you want linking up with a "whinging" company?


----------



## Savvy (18 Sep 2003)

*Oops!*

That wasn't Caius, it was lil' ol' me.


----------



## Suspicious Mind (18 Sep 2003)

*CAI ratings*

I was surprised at the CAI ratings.  The main surprise was EBS being 2nd last, not so sure about Ark Life being last.

But what do EBS and AL have in common?

a)  They don't have non-standard PRSAs

b)  They don't deal with brokers.

_(Perhaps not entirely uncorrelated features.)_

Let's look at the winner.  Eagle Star deal exclusively with brokers and they pay the highest commissions whether it be for Standard or their preferred Non standard PRSAs.

Now here's the rub.  The editor behind the CC article, i.e. the finance spokesperson for CAI,  is a broker and an ex employee of Eagle Star and a well known supporter of that company.  This article certainly didn't do him any harm!

Expect Eagle Star to milk it!!


----------



## Merlin (18 Sep 2003)

I think I've had just about enough of Savyy on his high horse about Non Standard PRSAs - any neutral observer will realise that Ark Life has no non standard PRSAs for one reason only - so they can use that fact as a marketing message!

In any case, even the highest charging non standard PRSAs will probably yield a bigger pension that you'd get with Ark Life's Standard PRSA, what with AIB investment managers uncanny ability to yield below par returns year on year on year. I know the past performance not a guide to future performance mantra is well established on askaboutmoney. I won't rehash the arguments over that issue again but I would say that there has been no significant study that has proven that the past performance of the same investment team (not just the same investment management company) is no guide to future performance. 

Just to respond to a couple of Savvy's points:

*No enhanced allocations for higher contributions. This is in line with the majority of companies and those which do give enhanced allocations only do so in a very limited way.*Ok so you're not giving a better deal because most other companies aren't?!??!

*DIS tailored to an ARF or an Annuity? You may or may not be aware that the whole issue of DIS strategy was and is a hot actuarial debate. The majority actuarial consensus is, as with Ark Life, against making this differentiation.*
I see you have appointed yourself spokeperson for the majority! Personally, I can't see the problem with providing a choice to the consumer.


----------



## Savvy (18 Sep 2003)

*Answering Merlin*

We are giving a better deal because all other companies (ex EBS) are majoring on Non standard PRSAs.  Their Standard PRSAs are mere showboating.

By definition a Default is not a choice. It is what the PRSA provider thinks is best. 

No way am I a spokesperson for the majority of actuaries. I am merely reporting the fact of what is current actuarial consensus.

Why do my arguments evoke such irrational attacks?

At least Merlin you accept that Standard PRSAs have marketing appeal.  Please tell that to all the others who do their utmost to denigrate Standard PRSAs and present Non standard PRSAs as the best thing since Brennan's bread.


----------



## Troyser (18 Sep 2003)

*Does it matter*

Ah to hell with it, does it matter. The whole thing is a cock up, much like The Luas. We all know that PRSA's can't and won't work. The sales are a disaster, a huge loss maker, and would probably have been made anyway with all this crapology about PRSA's.

And as for the Consumer magazine favouring one or the other, if I remember they have persisently called for PRSA's to be scrapped.


----------



## S (18 Sep 2003)

*Conspiracy*

"We all know that PRSA's can't and won't work".

Conspiracy theory 1: Who doesn't want it to work? Is it (a) The insurance companies. (b) The media, (c) The Govt (d) The intermediaries, (e) IFSRA, (f) The pensions board, (g) The general public, or (h) Ask About Money?


----------



## Alison (18 Sep 2003)

*What about service*

Brendan, 

No-one has mentioned premium collections yet.  I've no doubt you will curse the day you chose your PRSA provider - especially if a few staff members take it up and decide to change the premium on a regular basis, as they are entitled to do. 

They have not invested in their systems to handle the likley volumes of business.  It's a disaster waiting to happen.  

Why else would they wany 14 days notice!

Eagle Star have invested heavily in their systems over the last couple of years (anyone remember how appauling their service record was before?!).  

Another plus for ES as far as I'm concerned. 

Ali


----------



## Brendan Burgess (18 Sep 2003)

*Re: CAI ratings*

_Now here's the rub. The editor behind the CC article, i.e. the finance spokesperson for CAI, is a broker and an ex employee of Eagle Star and a well known supporter of that company. This article certainly didn't do him any harm!_

Suspicious Mind

Eddie Hobbs is the spokesperson for the CAI. He hasn't been that involved in the magazine in the past - he is certainly not the editor.

I don't know if he inspired or edited this article. Even if he did, I doubt if he would show any favouritism to Eagle Star or bias against any other products. They used criteria which were inappropriate in my opinion. I don't think that they are biased as such.

Eddie is an Authorised Advisor. If he is a "well known supporter of Eagle Star", it's news to me. He may well be, but I have never heard him single them out for special comment. He tends to attack products rather than institutions. He always strikes me as fair, even if I don't always agree with him.

As far as I know, he is 100% fee only, so I don't know how the article did him any good?

Brendan


----------



## ClubMan (18 Sep 2003)

*Re: CAI ratings*

Here we go again with the _EH_ bashing... yawn .... ZZZzzzzzz....... :rolleyes


----------



## Savvy (18 Sep 2003)

*EH Decoy*

Brendan,

You are quite right.  EH would never have approved this most naive analysis.

As always one must suspect that on AAM things are not quite what they might seem.  I suspect the EH factor has been introduced to detract from the arguments against the article and it ratings.


----------



## Happy AA (18 Sep 2003)

*Standard non Standard is best*

Am I missing something?

The Standard Life PRSA (which wouldn't have got into the survey because it is Non standard, confusing isn't it?) levies the usual 5% contribution charge  and an incredibly low 0.5% charge on its With Profit fund.  Apparently this is beacause of a mutualisation divvy of 0.5% set against the 1% charge.  

This is clearly far better than any of the Standard PRSAs in the survey and light years ahead of Irish Life's quasi With Profit PRSA which charges a whopping 1.85% per annum.  

Add on to this that if SL ever were to demutualise (after 3 years) there would be a generous windfall then the whole proposition becomes a "no brainer".  How can AAs advise anything else and still honestly say they are giving best advice?  And BTW the commissions are perfectly okay as well!

Getting back to the main theme.  If Standard Life's PRSA had qualified for the contest I guess it would have picked up 1 point for having half the management charges as the others i.e. equal value to allowing cash contributions.  This is a nonsense.


----------



## tedd (19 Sep 2003)

*Re: Standard non Standard is best*



> As always one must suspect that on AAM things are not quite what they might seem



What is your evidence for this statement?


----------



## Savvy (19 Sep 2003)

*AAM Mischief*

Tedd,  by its nature it is not possible to have evidence of false pretences on AAM given its anonymous nature.

In this particular case the unwarranted introduction of the EH factor serves to seriously undermine the credibility of the criticism of the Consumer Choice article.  Therefore one has to suspect that that was exactly as was intended even though ostensibly the anti EH post supported the anti Consumer Choice arguments.  

I have seen this happen before on AAM but, as I said, given its anomynous nature absolutely impossible to prove.


----------



## tedd (20 Sep 2003)

*Re: AAM Mischief*

I object to the "as always...on AAM" aspect of your comments. It is an entirely unwarranted criticism of the site. If you feel comments in relation to Eddie Hobbs on AAM are malicious/spurious/whatever, then of course you should say so.

Just don't tar the whole site with the same brush.


----------



## Savvy (20 Sep 2003)

*Apology*

Sorry, Tedd,  I did not intend to castigate AAM which is a truly excellent site.  

I feel quite sure that the introduction of the anti EH factor into this thread is meant to discredit the anti CAI argument.  Of course, I have no proof.


----------



## Purple Banshee (30 Sep 2003)

*suggestions?*

Following up from all the words of wisdom of the past two pages of criticism, does anybody have alternative suggestions as to how to survey/rate the various PRSA products on the market (apart from plugging their own company products or preferred choice?). Naive it may be, but the Consumer Choice survey is the only survey I know of that actually went to the bother of rating PRSAs.


----------



## darag (1 Oct 2003)

*Re: suggestions?*

regarding Standard Life's product, I think it's pretty
meaningless to quote a "management charge" on a with
profits policy, so I'm not sold on the .5% PA charge.  who
knows what charges and costs are buried in that financial
hairball known as a "with profits policy".  at least with index
funds or even managed funds, the management charge 
means something in theory; i.e. if you were to perform all 
the necessary trading yourself you would save that amount
of money.


----------



## arnold (3 Oct 2003)

*Yellow Packs*



> does anybody have alternative suggestions as to how to survey/rate the various PRSA products on the market


The point is the


----------



## arnold (3 Oct 2003)

*Slipped and press enter*

As I was saying, there is no diff between the Standard PRSAs.  

Imagine if the CAI did a survey of petrols:  Esso might come out on top for the following reasons:

Nicer smell
Easier to spell
The cuddly tiger is cute
Lots of outlets
Sponsor a tiger at the zoo

Would this justify giving Esso 5 points and Texaco 0 points.

Most people see no difference in petrols except price, and with Standard PRSAs there isn't even that except for very token reductions in the stratospheric end of the market.

Understandably,  CAI were frustrated that the statutory price control removed the possibility of Savermark 2 but this very arbitrary beauty parade on the most trivial of factors was quite irresponsible, and has of course been milked to bits by Eagle Star, see their website.


----------



## Munching Mike (4 Oct 2003)

*But does it matter*

Nobody is going to agree on any subjective measure once you stray beyond price. But does it matter anyway, given the tiny number of PRSA sales?


----------

