# Irish Life Indexed Funds TER



## Thomas_C (24 Aug 2017)

I have an Irish Life PRSA with a 0% contribution charge and a 1% annual management charge.

I'm invested in the PRSA indexed Global and Pacific funds at the moment.

I am trying to find out what the approximate TER is on these funds but there doesn't seem be any information out there.

Does anyone know what the TER is on these funds?


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## Sarenco (24 Aug 2017)

I'm afraid life companies don't disclose the TER on their unit linked funds and are under no regulatory obligation to do so.

Personally I think it's extraordinary that our Central Bank allows this lack of transparency to continue but there it is.

As a _very_ rough estimate, you can probably add around 0.15% to the AMC to arrive at the TER of a global equity fund.


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## Marc (24 Aug 2017)

You can obtain a pretty accurate number if you know exactly the fund you are invested in and the index that it is supposed to be tracking.

If your adviser has access to Financial Express, they will be able to provide a detailed history of the actual performance of a fund compared to an index.




We have seen some fairly substantial differences from unit-linked contracts compared to underlying index data from some Unit Linked funds which was covered by the Sunday Business Post a while back.

https://www.businesspost.ie/busines...-the-smoke-and-reflect-on-mirror-funds-301487

The latest regulation from the EU (PRIPS) should force greater transparency on Life Assurance companies


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## Steven Barrett (24 Aug 2017)

Sarenco said:


> I'm afraid life companies don't disclose the TER on their unit linked funds and are under no regulatory obligation to do so.
> 
> Personally I think it's extraordinary that our Central Bank allows this lack of transparency to continue but there it is.
> 
> As a _very_ rough estimate, you can probably add around 0.15% to the AMC to arrive at the TER of a global equity fund.



From the bit of digging that I have done, Sarenco is about right. Most of them are between 0.1% - 0.15% in addition to the AMC. But then, not all TER's are equal either as there is no set definition on what fees can or cannot be included, so just because a fund may say that their TER is low, there may be fees levied that are not included.


Steven 
www.bluewaterfp.ie


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## Sarenco (24 Aug 2017)

Marc said:


> You can obtain a pretty accurate number if you know exactly the fund you are invested in and the index that it is supposed to be tracking.


Sorry Marc but your example is very misleading.

The Irish Life Indexed Global Equity Fund does not purport to track either the FTSE All-World or the MSCI World index – the split between countries of that particular Irish Life fund is based on the average weighting of shares within Irish managed pension funds.  As things turned out, the relative underweighting of US stocks (and overweighting of Eurozone stocks) would certainly have hurt the performance of the Irish life fund relative to those indices since 2009, regardless of its TER.

Also, you have shown the gross total return of the FTSE All-World and the MCSI World indices for the relevant period, which ignores the impact of withholding taxes on the income available for reinvestment by a real life fund.  The impact of withholding taxes can be very meaningful over time but it has nothing to do with a fund's TER.

https://www.irishlife.ie/investments/fund-prices-and-performance


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## Sarenco (24 Aug 2017)

SBarrett said:


> But then, not all TER's are equal either as there is no set definition on what fees can or cannot be included, so just because a fund may say that their TER is low, there may be fees levied that are not included.



In practice, there really isn't any ambiguity as what should be included in an ongoing charges/TER figure - here's a guidance note from ESMA on the subject:-
https://www.esma.europa.eu/sites/de..._charges_methodology_for_publication_u_2_.pdf


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## Thomas_C (24 Aug 2017)

Thanks for all the responses much appreciated.

So looks like I'm being charged around 1.1% to 1.15% per annum.

The DAVYs self invested PRSA definitely looks like the much better option so. With charges of 0.75% plus low cost ETFs at under 15bps I should be able to save 20bps per annum.

Sorry another question. At what point would it make sense to switch to a small self administered pension scheme with a fixed annual fee rather than %. I currently have about €150k in my PRSA and my wife has about €80k


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## Sarenco (24 Aug 2017)

Hi Thomas

You might find this thread of interest -

https://www.askaboutmoney.com/threads/best-self-directed-pension.202918/


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## Steven Barrett (24 Aug 2017)

Thomas_C said:


> Sorry another question. At what point would it make sense to switch to a small self administered pension scheme with a fixed annual fee rather than %. I currently have about €150k in my PRSA and my wife has about €80k



A lot of Pensioneer Trustees charge a percentage of the value of the fund as a fee, subject to a minimum cost. Others that charge a flat fee usually charge €2,000 a year. Do you have your own company so you can set up a self administered scheme? 


Steven 
www.bluewaterfp.ie


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## Thomas_C (24 Aug 2017)

SBarrett said:


> A lot of Pensioneer Trustees charge a percentage of the value of the fund as a fee, subject to a minimum cost. Others that charge a flat fee usually charge €2,000 a year. Do you have your own company so you can set up a self administered scheme?
> 
> 
> Steven



No I don't have my own company didn't know that was a requirement.

Could I just setup my own company? Although that is probably just adding another layer of costs to make it too expensive to be worthwhile.


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## Steven Barrett (25 Aug 2017)

Thomas_C said:


> No I don't have my own company didn't know that was a requirement.
> 
> Could I just setup my own company? Although that is probably just adding another layer of costs to make it too expensive to be worthwhile.



A self administered pension scheme is for company paid pensions (you can make AVC's). Most employers don't allow employees to set up their own SSAS as it's too much hassle. 

If you don't have a company, you have to go down the Self Directed PRSA route. PRSA's aren't allowed by legislation to charge a flat fee for anything. All fees must be expressed as a percentage. 

Steven
[broken link removed]


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## Thomas_C (25 Aug 2017)

SBarrett said:


> A self administered pension scheme is for company paid pensions (you can make AVC's). Most employers don't allow employees to set up their own SSAS as it's too much hassle.
> 
> If you don't have a company, you have to go down the Self Directed PRSA route. PRSA's aren't allowed by legislation to charge a flat fee for anything. All fees must be expressed as a percentage.
> 
> Steven



Could i setup my own company and transfer pension from an existing standard PRSA.

What would the typical charges be?
A fixed monetary charge seems like it could be cheaper as the pension pot gets larger


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## Steven Barrett (25 Aug 2017)

Thomas_C said:


> Could i setup my own company and transfer pension from an existing standard PRSA.
> 
> What would the typical charges be?
> A fixed monetary charge seems like it could be cheaper as the pension pot gets larger



What are your circumstances? Are you self employed or an employee? 

Setting up a company is pretty cheap, a few hundred quid. But you have director's responsibilities and submission requirements to the CRO each year. 


Steven 
www.bluewaterfp.ie


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## Thomas_C (25 Aug 2017)

SBarrett said:


> What are your circumstances? Are you self employed or an employee?
> 
> Setting up a company is pretty cheap, a few hundred quid. But you have director's responsibilities and submission requirements to the CRO each year.
> 
> ...



I am just an employee not a director. If the company did nothing but hold the SSAS would I have many responsibilities? Is that even allowed. Might not be worth the hassle to save a little bit on pension costs


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## Steven Barrett (25 Aug 2017)

You have to have earned income to contribute to a company pension scheme. So you'd have to set up a company and bill your employer for the work you do. Then there's Revenue rules on whether you are self employed or an employee. I don't think it's a runner. 


Steven 
www.bluewaterfp.ie


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## Sarenco (25 Aug 2017)

@Marc

To be frank, I don't think your replacement graphic is any less misleading than your original example.

It is certainly true that a unit-linked fund's AMC does not accurately or fairly reflect the total cost to an investor of that product.  But to describe the AMC as the "tip of the priceberg" is a gross exaggeration.

Having said that, if you believe you can offer a pension wrapper that is cheaper than those offered by the life companies, I'm all ears.


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## Thomas_C (28 Sep 2017)

Just to let people that the advisor appointed by Company contacted Irish Life about the TER on my behalf and he said that the 1% charge was inclusive of all expenses.


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## Steven Barrett (28 Sep 2017)

Thomas_C said:


> Just to let people that the advisor appointed by Company contacted Irish Life about the TER on my behalf and he said that the 1% charge was inclusive of all expenses.



I don't believe that


Steven
www.bluewaterfp.ie


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## Thomas_C (29 Sep 2017)

SBarrett said:


> I don't believe that
> 
> 
> Steven



Either do I but the broker was insistent that there were no other charges


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## Sarenco (29 Sep 2017)

Thomas_C said:


> Either do I but the broker was insistent that there were no other charges


I doubt the broker was deliberately trying to mislead your company representative - I've no doubt he honestly thought he was providing correct information.

To be honest, I suspect most intermediaries would struggle to explain the difference between a fund's AMC, TER, OFC or tracking error, where relevant.

It's hard to blame the broker community for only providing partial information when our regulator doesn't insist on transparency (which I personally think is a scandalous dereliction of duty but I seem to be a lone voice around these parts on that subject).

Anyhow, don't you think it would be absolutely amazing if the total expenses imposed on the fund in any given year added up to exactly 100bps?  Isn't that a suspiciously round figure?


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## Steven Barrett (30 Sep 2017)

Sarenco said:


> I doubt the broker was deliberately trying to mislead your company representative - I've no doubt he honestly thought he was providing correct information.
> 
> To be honest, I suspect most intermediaries would struggle to explain the difference between a fund's AMC, TER, OFC or tracking error, where relevant.
> 
> ...



Too busy making sure boxes are ticked Sarenco. I still can't get over they saw the CHC were taking money out of clients funds and scolded them for not having the correct paperwork and told them to make sure everything on a checklist was complied with in the future 

On the Irish Life "Ter", they have contracts with an AMC of 0.75%, 1%, 1.25%. So if the 1% charge is inclusive of ALL charges, what about the 0.75% contract? 


Steven 
www.bluewaterfp.ie


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