# best way to distribute pension



## aidank (5 Dec 2010)

hi all,

I'm 29yrs old BTW, and am putting in my pension contribution for the year which will be about €7k

I can spread the €7k as follows
*International Fund (High Risk) *Direct investments into shares quoted on overseas stock markets for long term growth. 
*KBC Managed Fund (Medium/High Risk) *They aim to achieve above average growth over the longer term. Investments may be in Irish and overseas quoted equities, fixed-interest securities, property or cash.
*KBC PassiveManaged Fund (Medium/High Risk) *Invested 60% in Barclays Global Investors Limited which is a Passive Fund and 40% in KBC as an Active Managed Fund. Passive element will be invested in selected global markets tracking the index and reduce the risk of the fund 
*KBC Diversity Fund (Low/Medium Risk) *Objective of fund is to achieve 6- 8% growth per annum over five years with less dependency on equities and a greater spread risk.
*Cash Fund (Low Risk) *Mainly invested in Bond and other Fixed Interest Securities.

any advice on what way to spread it don't know too much about it

thanks


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## mercman (5 Dec 2010)

You obviously love to keep giving institutions large amounts of money as  management fees. Never Mind the aims and hopes of these or any Institutions  concerned. Look where these have got us all internationally.  Have you  considered investing in ETFs, which offer a far larger choice at around a  third of the cost.

Its your money and never mind the dribble of these chancers. The best way to do it is by yourself with your your intuition


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## aidank (5 Dec 2010)

mercman said:


> You obviously love to keep giving institutions large amounts of money as management fees. Never Mind the aims and hopes of these or any Institutions concerned. Look where these have got us all internationally. Have you considered investing in ETFs, which offer a far larger choice at around a third of the cost.
> 
> Its your money and never mind the dribble of these chancers. The best way to do it is by yourself with your your intuition


 
enlighten me please the schemes I listed are the options given to us for AVCs


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## DerKaiser (5 Dec 2010)

AidanK, the first thing to do is try get the best deal possible in terms of how much of your money is allocated to the pension and how much of an annual charge is taken from it.

The second is to examine your appetite for risk.  If you are you putting away this money as funds you will absolutely need in retirement the lower the better.  If you are prepared to take risks on your fund fluctuating then a higher risk fund might be a better choice, particularly given you are younger.


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## bpb52 (5 Dec 2010)

I moved into "Fixed Term Bonds" in 2007. I was nervous in the equity markets. No prior insight as to what was to follow.

Stay in low risk investments. 

Ask any shareholders in Anglo, AIB and BoI. At the time they were regarded as the best and most safe !

You have worked hard for your money, now invest wisely.


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## mercman (5 Dec 2010)

aidank said:


> enlighten me please the schemes I listed are the options given to us for AVCs



aidan, I will get the full details for you over the next couple of days. Meanwhile googlr ETFs and you will learn how they will work best for you.


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## DerKaiser (6 Dec 2010)

mercman said:


> aidan, I will get the full details for you over the next couple of days. Meanwhile googlr ETFs and you will learn how they will work best for you.



Surely the ETFs are provided by these same chancers who have the temerity to charge for a service?

Otherwise, are they eligible for pension tax relief to the average Joe?


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## LDFerguson (6 Dec 2010)

I think we're in danger of causing confusion to the original poster here.  My reading of his posts is that he is already in an Occupational Pension Scheme and has been offered a choice of funds for his AVCs.  Unless he is in a position to influence the pension scheme trustees to offer a wider choice to scheme members, these are his choices, or else he can start his own AVC PRSA.  

No other option will offer him tax relief.  If he buys an ETF, it doesn't qualify for tax relief.  If it is wrapped in a pension product, the pension product provider gets paid as well as the ETF issuer.

So if I'm reading his query correctly, aidank is seeking advice on which of the funds offered to choose.  This will be determined by how much risk he's willing to take with his money.


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## mercman (6 Dec 2010)

DerKaiser said:


> Surely the ETFs are provided by these same chancers who have the temerity to charge for a service?



The Management charge on a ETF is around 0.5% versus 1.5% on a normal investment fund. They are not subject to entrance fees or exit fees or mad TER charges. Traded similar to equities and one does not have to wait inordinate periods for their money to be refunded. A huge variety are available but similar to any investment 'do your own research'.

As for pensions these are eligible for self administered pension plans.


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## mercman (6 Dec 2010)

LDFerguson said:


> This will be determined by how much risk he's willing to take with his money.



Whilst i am awaiting full clarification from Pension experts, surely  there is no greater risk than the typical pension plan which has  performed pathetically to their funds holders. I would prefer to take  the risks on International fund Managers rather the offerings that we  have all been led to believe was the best long term pension investment.


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## DerKaiser (6 Dec 2010)

mercman said:


> The Management charge on a ETF is around 0.5% versus 1.5% on a normal investment fund. They are not subject to entrance fees or exit fees or mad TER charges. Traded similar to equities and one does not have to wait inordinate periods for their money to be refunded. A huge variety are available but similar to any investment 'do your own research'.
> 
> As for pensions these are eligible for self administered pension plans.



You can get 100% allocation and 0.75% management charge no problem on a pension in the better performing funds in the Irish market.  There are no delays in accessing your money.

I don't think the OP is likely to be eligible for a self administered scheme so the pension tax relief is out of the question.


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## mercman (6 Dec 2010)

DerKaiser said:


> You can get 100% allocation and 0.75% management charge no problem on a pension in the better performing funds in the Irish market.  There are no delays in accessing your money.
> 
> I don't think the OP is likely to be eligible for a self administered scheme so the pension tax relief is out of the question.



Your first point is pure rubbish. I have spent the last three months making serious efforts to have my Irish based pension funds transferred and it only has happened in the past couple of days. 

What about the TER charges which in cases sum up to approx an additional 1.25 % minimum. Please do not try and confuse the issues in giving a false impression of how realistic, upfront and worthwhile value is offered by the funds based in reland by the large institutions.

If you want a correct, honest and performing pension talk with the experts who will not try and confuse the issues and make every effort to have a commission paid to themselves.

As already mentioned when the full facts are to hand, I will report back in relation to self administered schemes.


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## aidank (6 Dec 2010)

LDFerguson said:


> I think we're in danger of causing confusion to the original poster here. My reading of his posts is that he is already in an Occupational Pension Scheme and has been offered a choice of funds for his AVCs. Unless he is in a position to influence the pension scheme trustees to offer a wider choice to scheme members, these are his choices, or else he can start his own AVC PRSA.
> 
> No other option will offer him tax relief. If he buys an ETF, it doesn't qualify for tax relief. If it is wrapped in a pension product, the pension product provider gets paid as well as the ETF issuer.
> 
> So if I'm reading his query correctly, aidank is seeking advice on which of the funds offered to choose. This will be determined by how much risk he's willing to take with his money.


 
correct these are the funds offered by my company

currently we have a defined benefit scheme yes defined benefit with the company, I am doing the AVCs for tax purposes and putting in as much as I can as it looks like this may be the last year that it is worthwhile doing so


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## LDFerguson (6 Dec 2010)

mercman said:


> Whilst i am awaiting full clarification from Pension experts, surely there is no greater risk than the typical pension plan which has performed pathetically to their funds holders. I would prefer to take the risks on International fund Managers rather the offerings that we have all been led to believe was the best long term pension investment.


 
But my point is that it's academic discussing whether or not an ETF would be a suitable investment choice for aidank as it's not a choice that's available to him.  He can either choose from the AVC fund choices offered or start his own AVC PRSA.


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## DerKaiser (7 Dec 2010)

mercman said:


> Please do not try and confuse the issues in giving a false impression of how realistic, upfront and worthwhile value is offered by the funds based in Ireland by the large institutions


 
I looked up TER charges as I'm unfamiliar with the term (I've never heard it mentioned in 12 years working in the financial industry) and got this:

http://www.guardian.co.uk/money/2006/aug/13/fundsbondstrusts.investments

So I think you've unfairly singled out Ireland.

The article notes that small funds have higher TERs. 

How in the name of God do you think that getting everyone to invest their time and energy to adminsiter their own pensions and pay large transactions costs on relatively small regular deals is a good idea?

The large pooled funds benefit from economies of scale and are more suited to individuals who are not multi millionaires that can employ finance experts to manage their wealth.

The guy wants advice on investing €7k in his company approved AVC to take advantage of the tax relief situation not a course in how he could theoretically pay lower charges if he was a multi-millionaire with the time and expertise to manage the whole thing himself.


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