# Pensions Where to Start



## Scrooge (11 Jan 2021)

Hi Folks,

I need to get started on a Pension here in Ireland I know dropped the ball here a bit; but looking for advice on companies options etc. I spent a large number of years in Australia and only returned 3 years ago and the whole pension scheme here seems a bit confusing or else I just have not given time to get my head around it.


Background on my situation.

33 Years Old
1 x Mrs working full time
2 kids less than 4 years old
No mortage
1 x Personal Loan 8k (should be paid off by May)
$70k AUD in Pension Fund (If I ever see it) 
Wage €80k (Self employed Contractor)
2 x cars < €16,000 combined
No other assets of mention
Necessary Outgoings per month €1200 (All Bills; Diesel, Internet, Shooping, Electricity, Insurance etc)

If I pay into a Pension for 10 -15 years and die whats happens to those payments do they go to my Mrs and Kids? Or are they lost?

What % of my wage should I be putting aside for a pension given the fact I am a late starter as such with pension funds

Any ideas or reccomendations on companies that setup and manageme funds here 


Alos open to suggestions on investments if there are more efficient ways to invest money.


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## Protocol (11 Jan 2021)

If you die before retirement, the accumulated pension fund is not lost.

I haven't time to go into the details now, but a typical PRSA would become part of your estate.


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## NotMyRealName (11 Jan 2021)

Scrooge said:


> Hi Folks,
> 
> I need to get started on a Pension here in Ireland I know dropped the ball here a bit; but looking for advice on companies options etc. I spent a large number of years in Australia and only returned 3 years ago and the whole pension scheme here seems a bit confusing or else I just have not given time to get my head around it.
> 
> ...


 Well, if you're self employed then an executive Pension is the way to go. Get the lowest cost and fees provider ( learned my lesson ......late) . No mortgage? Rent? Childcare?  Anyway , pay off the loan first. Keep a good cash reserve to make sure of no credit card interest or car payments. Then pension what you can afford. An exec pension can also be accessed from age 50 but terms and conditions apply. Many people on here more expert than me who can help steer you. Keep the fees LOW. Small % eat into fund over time. That's my advice...


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## Scrooge (11 Jan 2021)

Thanks for the replies guys;

The executive pension sounds interesting to be honest I only expect to be self Employed for another 5 years max

So would this be transferrable to another fund if I went PAYE after 5 years ?


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## NotMyRealName (11 Jan 2021)

Scrooge said:


> Thanks for the replies guys;
> 
> The executive pension sounds interesting to be honest I only expect to be self Employed for another 5 years max
> 
> So would this be transferrable to another fund if I went PAYE after 5 years ?


I don't know, I did it the other way around..An exec is way more tax efficient


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## Gordon Gekko (11 Jan 2021)

NotMyRealName said:


> Well, if you're self employed then an executive Pension is the way to go. Get the lowest cost and fees provider ( learned my lesson ......late) . No mortgage? Rent? Childcare?  Anyway , pay off the loan first. Keep a good cash reserve to make sure of no credit card interest or car payments. Then pension what you can afford. An exec pension can also be accessed from age 50 but terms and conditions apply. Many people on here more expert than me who can help steer you. Keep the fees LOW. Small % eat into fund over time. That's my advice...



Self-employed people can’t set-up an Executive Pension.

Nor can they access their pension at age 50.


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## amadan1000 (12 Jan 2021)

NotMyRealName said:


> Well, if you're self employed then an executive Pension is the way to go. Get the lowest cost and fees provider ( learned my lesson ......late) . No mortgage? Rent? Childcare?  Anyway , pay off the loan first. Keep a good cash reserve to make sure of no credit card interest or car payments. Then pension what you can afford. An exec pension can also be accessed from age 50 but terms and conditions apply. Many people on here more expert than me who can help steer you. Keep the fees LOW. Small % eat into fund over time. That's my advice...



Please elaborate on your journey and experience the finding the lowest cost fees .I have a directors pension and am only now unravelling the hidden costs and looking for alternatives. Not meaning to hijack the thread as this information should be pertinent to op.


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## Scrooge (12 Jan 2021)

All good *amadan1000 *its all relevant for the discussion please feel free to expand on your own experiences


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## NotMyRealName (12 Jan 2021)

amadan1000 said:


> Please elaborate on your journey and experience the finding the lowest cost fees .I have a directors pension and am only now unravelling the hidden costs and looking for alternatives. Not meaning to hijack the thread as this information should be pertinent to op.


Well my most recent experience is on another thread " pension pot transfer"
I started an exec pension by moving my small PRSA into it 14 years ago. I used a main pension provider, through my bank. 
I've been in a position, even through the recession, to add to it in lump sums every year. Initially, small lumps then, as company cashflow improved, larger lumps in the last 5 or 6 years. 
Provider charged 5% on contributions, 3% if over 12k and 1% Annual Management Charge. 
Download a compound interest calculator and see what that can do over time.....
I'm currently renegotiating the terms for going forward. 
My contract allows for 100% transfer value....other contracts may not. Ask your provider for details and shop around with providers. I wish I'd clued into this earlier. However, running a business is hard enough and at least I started a pension .....
Let's say you start with 50k in your pot today and you contribute 12k per annum @ 1% AMC and 3% contribution charge. We can only presume ( hope for) growth and the magic number is 5% per annum. In 15 years that's total €257,856 
Now assume .75% AMC and 0% contribution charge ( this is gettable in the market).
In 15 years that's total €362,889
So € 105,000 in creeping fees
My cornflakes are boiling in my stomach...... thinking about it


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## NotMyRealName (12 Jan 2021)

NotMyRealName said:


> Well my most recent experience is on another thread " pension pot transfer"
> I started an exec pension by moving my small PRSA into it 14 years ago. I used a main pension provider, through my bank.
> I've been in a position, even through the recession, to add to it in lump sums every year. Initially, small lumps then, as company cashflow improved, larger lumps in the last 5 or 6 years.
> Provider charged 5% on contributions, 3% if over 12k and 1% Annual Management Charge.
> ...


Apologies.....this calculation is completely flawed......update in a few mins


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## NotMyRealName (12 Jan 2021)

50k with 12k added per annum @ 3% allocation charge and 1% AMC for 15years @ 5% growth p.a. is total €321,680
50k with 12k added per annum @ 0% allocation charge and .75% AMC for 15 years @ 5% growth p.a. is total €338,145 
So €17k difference over 15years. 
Obviously if the sums are larger the charges damage is greater over time. 
Apologies to all for the previously posted misleading calcs. I'm not a pro ( obviously) so consult one if you need to. It'll be money well spent.


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## NotMyRealName (12 Jan 2021)

My posts may have flaws. I'm learning the hard way. The key takeaway here is...Look into your individual circumstances and do SOMETHING.... professionals can help but you'll need to ask the right questions.


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## Scrooge (12 Jan 2021)

Thanks for the above I am 100% going to go to a professional at some stage stuff is way above my head just trying get my head around it all first


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## Sheepshooter (13 Jan 2021)

Gordon Gekko said:


> Self-employed people can’t set-up an Executive Pension.
> 
> Nor can they access their pension at age 50.



I'm a contractor - I'm self employed (via limited company).

I have setup an executive pension and I can access it at 50.

So you can figure by now I think you are very wrong here.


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## Gordon Gekko (13 Jan 2021)

Sheepshooter said:


> I'm a contractor - I'm self employed (via limited company).
> 
> I have setup an executive pension and I can access it at 50.
> 
> So you can figure by now I think you are very wrong here.



There are two possibilities:

1) I am “very wrong here” and you are right

2) You don’t know what “self-employed” means and you actually work for a limited company


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## Steven Barrett (13 Jan 2021)

Sheepshooter said:


> I'm a contractor - I'm self employed (via limited company).
> 
> I have setup an executive pension and I can access it at 50.
> 
> So you can figure by now I think you are very wrong here.



You are a company director as opposed to self employed which is being a sole trader. That is why you can set up an executive pension plan. You can also only access your pension from age 50 if you leave your company and sell/ liquidate your shares in the company. 


Steven
www.bluewaterfp.ie


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## Sheepshooter (13 Jan 2021)

Gordon Gekko said:


> There are two possibilities:
> 
> 1) I am “very wrong here” and you are right
> 
> 2) You don’t know what “self-employed” means and you actually work for a limited company



Or 3. You don't know what 'self-employed' means and I actually own that limited company so am self-employed. 

See

revenue.ie/en/self-assessment-and-self-employment/documents/code-of-practice-on-employment-status.pdf

Anyway - it is a bit grey & doesn't really matter. I agree you can only access your pension by leaving/closing down that Ltd. company.


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## RedOnion (13 Jan 2021)

*grabs popcorn*


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## Gordon Gekko (13 Jan 2021)

Sheepshooter said:


> Or 3. You don't know what 'self-employed' means and I actually own that limited company so am self-employed.
> 
> See
> 
> ...



My word...

A company has a separate legal personality to its owner.

It’s why, when a company owner says “but that’s my money there in the company”, his or her advisor has to point out that it’s actually the company’s.

You are not “self-employed”. You are employed by a third party, a company, that you happen to own.

A self-employed person is a sole trader who pays their taxes and submits their accounts through their Form 11 tax return.

Choose your battles...


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## RedOnion (13 Jan 2021)

@Scrooge 
As you can see above, your exact employment status has a massive bearing on your pension options.

To get back on topic, and allow people point you in the right direction, you might clarify if you are:

A self-employed sole trader
A contractor, via an umbrella company
An owner / director of a limited company
Something else.


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## Scrooge (13 Jan 2021)

Cheers Red Onion I am Number 2 Umbrella


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## RedOnion (13 Jan 2021)

Scrooge said:


> Cheers Red Onion I am Number 2 Umbrella


Perfect. And are you a director of the umbrella company?


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## Scrooge (13 Jan 2021)

Yes correct I am a director of the umbrella


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## RedOnion (13 Jan 2021)

Scrooge said:


> Yes correct I am a director of the umbrella


Perfect. Just to be clear, from a pension perspective that's very different to being self employed.

Now, is the '80k wage' the gross amount that your company invoices the client?

There are 2 main benefits of going the executive pension route Vs say a Personal pension plan:
1. There is scope for much higher funding. However, you need to be realistic about how much you can afford to put in. Great benefit if you're trying to 'catch up' on pension funding.
2. The pension contributions are made by the company, not you. So in effect there's 52% tax relief, rather than 40%.

On the flip side, fees can be high for some products. They're not standardised like with a PRSA.

If you get a different job in future, you can leave the pension separate, or transfer into a company pension or PRSA. So don't put it off just because you might leave the contracting approach.

There are other contributors much better versed in pensions than I am, so I'll leave it to them now that we understand your circumstances.


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## Scrooge (13 Jan 2021)

OK apologies misunderstanding on my end on the whole Umbrella & self employed bit;

So my setup is as follows

I work for Engineering Company A Monday to Friday
I submit timesheets with my hours to Contracting Plus every two weeks (Accountant)
Contracting Plus then invoice a Recruitment Agency A.
Recruitment Agency A then invoice Engineering Company A
I then get a payslip from Contracting Plus and funds get transferred into my acccount.


A bit long winded but thats my setup.


If I did go Full Ltd is there any benefit froma pension perspective?


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## RedOnion (13 Jan 2021)

Scrooge said:


> If I did go Full Ltd is there any benefit froma pension perspective?


Not really. Sorry I wasn't clear in earlier post - once you're a director of the company it gives you the option of an executive pension. That's why the companies that provide the umbrella structures give the director option.


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## Scrooge (13 Feb 2021)

Right folks so I have been in contact with a few companies and brokers and looking for some advice vetting them

*Irish Life - Fund Risk rating IL5 of 7*
Contribution Charge= 3.5% Reduces to (3% after 5 years)
1% Annual Fund Charge

*Zurich*
Premium Allocation: 98%
Annual Management Charge: 1%
Policy Fee: €3 per month
Early Transfer Fees in Years 1-5 @ 5%, 4%, 3%, 2%, 1%

*Broker – (Using Zurich Prisma 4 / 5 Fund)*
Investment Allocation 100%
1.25% Annual Fund Charge (0.25% to the broker)
Policy Fee: €3 per month
Early Transfer Fees in Years 1-5 @ 5%, 4%, 3%, 2%, 1%


I suppose my first question is;

*Upfront Charges*
Are the Contribution Charge (96.5% of contributions go to the fund), Premium Allocation (98% of contributions go to the fund) & Investment Allocation essentially the same thing.

*Broker* 
Also how can the broker offer me 100%when the company he is using are only offering 98%.

Is there some kicker on the other end I should be looking for i.e like a high commissionin on withdrawals etc.

*Other Questions*
Are there any other fees that I should be looking at that are not listed above

Outside of fees what should else should I be looking at ?




Sorry if someof this is very basic butstating at the bottom here


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## time to plan (13 Feb 2021)

Scrooge said:


> Right folks so I have been in contact with a few companies and brokers and looking for some advice vetting them
> 
> *Irish Life - Fund Risk rating IL5 of 7*
> Contribution Charge= 3.5% Reduces to (3% after 5 years)
> ...


I have a similar thread running. By contacting Zurich direct and talking to their tied agent, they offered 0.75% AMC and 100% allocation. I’m possibly looking to put more funds in per month and this may have reduced the AMC. It’s all very opaque. But if you went via broker, maybe worth contacting them direct to see if you can get a better deal. Or if you did contact them directly, asking for a better deal.


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## NotMyRealName (13 Feb 2021)

Ok, I'm presuming that you're looking at an exec pension scenario. 
Also look at offerings from Standard Life and Aviva probably through tied agents...
100% allocation would be good..
Less than 1% AMC ( including brokers % and trail fees ) would be good..
I'm not sure a flat charge of €3 per month is significant...( Make sure it's not a % and/or doesn't have an upward review after X amount of years..)
At this stage, I think penalties on transfer values could be ignored ( others may disagree) as you're unlikely to be tinkering with it for 5 years.... HOWEVER, watch out that there are NO further penalties carrying on to effect transfer values in the future. As ( hopefully) your pot grows, you might have some leverage in re-negotiating more favourable AMC in the future or a switch to a different provider.  This was my experience and I , most likely, could have re-negotiated sooner.
That's my 10 cents worth... You're making the start and that's a very positive thing , so best of luck..


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## GSheehy (13 Feb 2021)

time to plan said:


> I have a similar thread running. By contacting Zurich direct and talking to their tied agent, they offered 0.75% AMC and 100% allocation. I’m possibly looking to put more funds in per month and this may have reduced the AMC. *It’s all very opaque.* But if you went via broker, maybe worth contacting them direct to see if you can get a better deal. Or if you did contact them directly, asking for a better deal.



It's a fallacy to think that you can buy a pension/investment product, with lower costs, than you can from a . 

Especially when you know exactly what you're looking for. 

Gerard

www.prsa.ie


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