# Defined Benifet + AVC + PRSA + ETFs



## tony_conlon (9 Mar 2009)

Hi folks,


My situation:
- Work in Intel.
- Member of defined-benifet pension scheme (I only contribute the minimum because I have no faith in fund managers ... proven correct I guess.)
- AVCs: I don't make any contributions (The 3 providers linked to Intel have all made losses in the last few years).

Question:
1. Can I contribute to a PRSA in addition to keping my defined-benifet pension?
2. Something like [ISEQ 20 ETF SHARES     IETF.I] ... is it possible to pay AVCs into something like this fund that trades on the ISEQ?
3. Something like [DJ EURO STOXX 50     ^STOXX50E] ... is it possible to pay AVCs into something like this fund that trades on the DJ?


- The likes of those ETFs look kinda safe to me; I like the idea of not been tied to either individual stocks or been tied to a useless fund manager.
- I understand I can buy ETFs outside the scope of pensions/AVCs; but I guess it would be better if I could use tax incentives to make the purchases ie. via AVCs.


I apologise folks if the above questions seem mad ... I'm obviously an amateur ... I do have an interest ... I believe fund managers are not particularily experts (at making money); they seem to be more so sales men who sell stuff for banks etc ... Sorry 


Any help much appreciated folks.


Regards,
Tony


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## LDFerguson (9 Mar 2009)

In order to make Additional Voluntary Contributions but not use the AVC providers at Intel, you can start your own AVC PRSA.  You have to pay gross by Direct Debit but you can get your tax credits adjutsed to give you the tax relief.  You have to apply for PRSI relief manually annually. 

You can buy an AVC PRSA which invests in index-tracking funds, e.g. a Eurostoxx 50 index-tracker, or a S&P 500 index-tracker or others.  No fund manager input - just following the index.

You say the three providers linked to Intel have all made losses in the past three years.  So has every major stock-market index around the globe.  Keep in mind the mantra - fund values can go down as well as up.


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## nad (9 Mar 2009)

LDFerguson said:


> In order to make Additional Voluntary Contributions but not use the AVC providers at Intel, you can start your own AVC PRSA. You have to pay gross by Direct Debit but you can get your tax credits adjutsed to give you the tax relief. You have to apply for PRSI relief manually annually.
> 
> Hi just wondering how to go about it this way ,and is there a web site with funds and options that would available


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## Jester (9 Mar 2009)

I my experience if you go for a standard PRSA your fund choices can be limited, but charges are capped at a maximum of 1% management fee and 5% premium charge. You may have to go for the non standard PRSA where the charges are not limited, but the range of funds can be much wider. Bear in mind that 3 AVC providers is a very good selection (the norm is 1, possibly 2) and also that the management fees and admin fees on your work AVC can be much less than an AVC PRSA, plus the relief is automatic for both Tax and PRSI. Performance may have to be a good bit better to make up the difference.

In a DB scheme the peformance of the managers does not normally have a direct effect on your pension and in reality as it is not DC, it means very little in terms of your own contributions or the return on them. However it can mean for example that the employer will have to pay more. However, if things are very bad (as they are) then this can change, for example they can ask the employees to pay more.

When you say 'pay the minimum' what sort of pension are you getting in return? Is it 1/60ths or 1/80ths for each year of service?


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## LDFerguson (10 Mar 2009)

nad said:


> Hi just wondering how to go about it this way ,and is there a web site with funds and options that would available


 
You set up your own AVC PRSA with a PRSA provider or broker of your choice. The contributions are deducted from your bank account by Direct Debit. You get a tax certificate with your PRSA policy document. You send this certificate to Revenue who should increase your tax credits, allowing you tax relief. Once a year you apply for Employee PRSI relief. 

The Pensions Board website has a list of PRSA providers.


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## Omega (10 Mar 2009)

tony_conlon said:


> .....AVCs: I don't make any contributions (The 3 providers linked to Intel have all made losses in the last few years).....


The providers may have recorded losses overall but when making AVC contributions, can you not choose the funds in which your money is invested? In this case, could you not pick a "safe" fund (like cash or bonds) and thereby avoid losses.....


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## tony_conlon (10 Mar 2009)

To Jester: I'll apparently get 1/60th ... I pay 5% of my income.

To LDFerguson: Thanking you for the kind response. I understand about all the losses etc ... It's more a case of I don't trust them (If they don't know me then I'm just a number to them ... in this case I may aswell do it myself) ... Another thing that annoys me about the 3 in Intel is that none of them appear to have any differences between them; they all preach the same **** when they make their annual on-site visit ... I reckon they're afraid to deviate from each other in case one of them gets thrown out of the Intel circle (better all stick together and make the same losses/gains per year ... bull.


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