# Pension Options



## bm (16 Jun 2003)

This post might have some silly questions but I'm trying to get a few things straight in my head, so maybe someone can help.


For someone who currently doesn't have a pension, what are the options?

Occupational Scheme, Standard PRSA and non-standard PRSA?

Do other "personal pension" products still exist?

If not - Since the 8 companies that are currently offering standard PRSAs are all charging the full 5% and 1%, does that mean that 5% and 1% is the best rate available for a personal pension at the moment?


And - Is there any sign yet of another release of standard PRSA products?  Has anyone heard wether any of these would have charges less than 5% and 1%?


And - For an execution only service can you get any better deals?  Are there likely to be any brokers refunding any commission out there?


I think what I'm really wondering is - Is all the competition based on the reputations of the different institutions since they're all charging the same?


Sorry about the list - New to this whole arena!
Thanks for any help though!
bm


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## ClubMan (16 Jun 2003)

Not silly questions at all. The whole area of pension options and charges is a bit of a minefield in my view. In particular some people/commentators seem to give the idea that PRSAs are per se the best/lowest charging pension option when this is not necessarily the case.

*Occupational Scheme*

This is obviously only an option if one's employer provides an occupational scheme. Note that from September employers who don't have an occupational scheme open to all employees will be obliged to provide access to (including contributions by way of payroll deductions) a PRSA although they will not be obliged to make contributions on the employees behalf.

*Do other "personal pension" products still exist?*

Yes - personal pension plans aka retirement annuity accounts (RACs) still exist and may well have lower charging structures than PRSAs. This, and the relative pros and cons of PRSAs versus RACs, should be borne in mind when choosing between the two.

*And - Is there any sign yet of another release of standard PRSA products?*

You can keep tabs on latest developments on the [broken link removed].

*Has anyone heard wether any of these would have charges less than 5% and 1%?*

I think that all standard PRSA providers to date are charging the maximum possible (i.e. 5% on contributions and 1% annual management fee). However I'm sure I'll be corrected if this is not the case.

Hope this helps.


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## Alan Moore (16 Jun 2003)

*PRSAs.....*

Hello Clubman, just on your last point.

Some providers are offering better allocation rates for higher premiums and some will reduce the management charge after a period of time. 

Another option would be to agree a fee with an advisor for setting up a PRSA (with or without advice) . By doing this you may be able to eliminate the 5% charge altogether (depending on the provider ). You could in time save multiples of the fee you paid.


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## ClubMan (16 Jun 2003)

*Re: PRSAs.....*

Thanks for that clarification _Alan_.


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## bm (16 Jun 2003)

*PRSAs...*

Hi

Thanks for the replies Clubman and Alan.  Very useful information.



> Another option would be to agree a fee with an advisor for setting up a PRSA (with or without advice) . By doing this you may be able to eliminate the 5% charge altogether (depending on the provider ). You could in time save multiples of the fee you paid.



Alan, you may have opened up a tap on questions from me now.  I hope you don't mind.

Have you any experience of anyone having done this with a PRSA?  I know that its a fairly new area.

Can anyboy recommend any advisors that are open to that sort of negotiation?

How would it work?  Would this advisor be an advisor working directly for one of the (now) 9 companies offering PRSAs or are you talking about a broker? 

What is the argument for reducing the contribution fee?  Is it on the basis of no ongoing "support" without paying another fee.  In other words would you have to pay again to make changes to the mix of funds and so on?

And the trickiest one - For an execution only service and a reduction on the 5% - What would be a ball park figure for the fee? Are we talking €100 to €500, €500 to €1000, €1000 to €5000...  Like I said - completely new to the area.  Just trying to get a grasp on options.

Thanks again lads for the useful information - Keep up the good work!

bm


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## ClubMan (16 Jun 2003)

*Re: PRSAs...*

*Can anyboy recommend any advisors that are open to that sort of negotiation?*

You could try our own Liam D.Ferguson at [broken link removed] perhaps?


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## Alan Moore (16 Jun 2003)

*Answers*

"Can anybody recommend any advisors that are open to that sort of negotiation?"

I've heard good reports about Liam Ferguson however I normally recommend myself.

"How would it work? Would this advisor be an advisor working directly for one of the (now) 9 companies offering PRSAs or are you talking about a broker?"

I'm talking about a broker. 

"What is the argument for reducing the contribution fee? Is it on the basis of no ongoing "support" without paying another fee. In other words would you have to pay again to make changes to the mix of funds and so on?"

Well its not that there is no ongoing support as such. You get what you pay for. If you want ongoing advice you reach a deal for same. Under a PRSA you will get regular updates from the provider. If you want initial advice you only strike a deal for this. If you want to change funds without advice you contact the provider directly.

"And the trickiest one - For an execution only service and a reduction on the 5% - What would be a ball park figure for the fee? Are we talking €100 to €500, €500 to €1000, €1000 to €5000... Like I said - completely new to the area. Just trying to get a grasp on options"

Good question, an awkward one at that....

At present the rules around PRSAs say that an advisor must complete a questionnaire in order to assess affordability and risk for the client. So for this you'd be talking about the 500-1000 range.

However there are moves in the industry to remove this need. So if a client knows what he wants and is comfortable in his own mind with the reasons why a certian PRSA is best for him, an execution only policy can be taken out. I'm assured there will be an answer on this within the week or so. This will bring the cost down below 500 euro.


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## ClubMan (16 Jun 2003)

*Re: Answers*

*I've heard good reports about Liam Ferguson however I normally recommend myself.*

Sorry. I merely recommended _Liam_ because I've had some dealings with him myself. Judging by his contributions to AAM I get the impression that _Alan_ could be worth trying too!


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## bm (17 Jun 2003)

*Re: Answers*

Thanks again lads for the help, the picture is clearing up quite nicely.  

Alan, I'll probably e-mail you sometime over the next few weeks, thanks for your help so far.  If you don't mind though, I just have a couple more questions I'd like to ask in the public domain.  I'm sure anyone else thinking of an execution only service would be interested too... anyway...

Firstly - I presume that the discount on the 5% comes from some form of commission refund. Is that correct?

If that is the case, does it mean that the discount that could be negotiated depends on the commission paid by the particular provider?  In other words if canada life pay you more commission than, say, New Ireland does it make it easier for you to give a customer a lower contribution fee on the Canada Life products?

Again, if this is the case, it could be a big factor for someone trying to choose their provider.  Without going into specifics, could you list the providers in order of commission levels?  Not looking, necessarily, for details, but if it is actually relevant, just a listing from 1 to 8 or however many you deal with.

I understand that I might be getting a bit cheeky here and that you might not want to go into that level of detail on your business in a public forum, so no offence taken if you don't want to answer all of the above.

Thanks again,
bm


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## Alan Moore (17 Jun 2003)

*Not exactly....*

Hello BM

If a 5% discount is given (not all providers) it is because commission has not been taken. We will charge a flat fee regardless of the provider. 

The fact that one provider pays more commission than another does not neccessarily mean that the improvement in benefit structure will correlate with the commission not taken.

Essentially the question you are rying to get an answer
to is "which is the best value over the long term assuming no commission is taken". There are more factors involved here than you might think (e.g. present premium, availability of funds, distance to retirement, future premiums) therefore I would always recommend the advice route. Might cost a bit more but it'll be worth it.


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## bm (17 Jun 2003)

*Re: Not exactly....*

Hi again Alan, and again, thanks for your input.

I understand the mechanism of the discount now, so thats great.



> Essentially the question you are trying to get an answer to is "which is the best value over the long term assuming no commission is taken".



Yep, you're dead right.  The problem (without asserting this as any sort of complaint about brokers/providers or anybody) is that while I reckon I have access to the necessary knowledge to assess most aspects of my situation and of the various funds and providers - the piece of the jigsaw that is left is the actual fees associated with funds/providers if I go through the discounted route.

Given that, it is probably best to go down the advice route alright.

Again, thanks all for the help and hopefully I'll be in touch over the next month or so.
bm


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