# Executive pension: Ark or QL



## ClubMan (4 Jul 2003)

*I'm an IT contractor with my own company and executive pension...*

I've always wondered about that term "executive pension". Does it actually mean anything (i.e. is such a pension fundamentally different to a normal personal pension plan/retirement annuity contract) or is it just marketing fluff?

*I'm thinking however of changing to a QL pension which has no charges apart from the 1% mgt*

_QL_ also has a €3 fixed charge on monthly contributions. You'd need to work this out as a percentage of your monthly contribution (e.g. €100 per month = 3%) when comparing with other pension charges. There are  that charge only 1% annual management fee and nothing else in case that's of any use. In general the lower the charges and the less "drag" on performance the better. Note that there are other charges that are subsumed/hidden within the fund and which are reflected in the day to day unit price - e.g. both index trackers and managed funds have to pay stamp duty on acquisitions and broker charges on acquisitions/disposals. I've heard it estimated that these can add c. 0.5% to the effective cost of an index tracker and 1.5% to the effective cost of an actively managed fund but I'm not sure how accurate this is and it's not like you can avoid these charges with _any_ fund in any case... (hope I'm not obfuscating the issue here... :\   ).


----------



## wowser (4 Jul 2003)

I was going to pay an annual lump sum, avoiding the monthly charge. As for those hidden costs you mention, I'm sure Ark Life have them in spades  . Thinking about it, I guess my main query is whether there is a drawback in stopping one pension and starting another, apart from the hassle of keeping track of both.


----------



## wowser (4 Jul 2003)

Hi folks,
I'm an IT contractor with my own company and executive pension with Ark Life. At the time I took it out I got (I think) a good deal - 1% mgt charge, 102% allocation, 5% bid-offer spread, no commission charges. So, to my reckoning I pay 3% of my premium in charges.  I'm thinking however of changing to a QL pension which has no charges apart from the 1% mgt.  

My question is whether there's any benefit to staying with Ark Life?


----------



## ClubMan (4 Jul 2003)

*I guess my main query is whether there is a drawback in stopping one pension and starting another, apart from the hassle of keeping track of both.*

Not usually as far as I know - as long as there are no hidden (or explicit!) penalties for doing so or ongoing charges other than the annual management fee (e.g. some pensions charge a relatively small fixed monthly policy fee, but continue to do so even when monthly contributions are not being made - I believe that _QL's_ only applies as long as monthly contributions are being made). The main issue is the slight administrative hassle of managing and keeping track of multiple pensions but this should not necessarily be an onerous task as long as you retain all relevant documentation/correspondence. Some would argue that spreading your overall pension savings across several pension providers (assuming, of course, that none levies exhorbitant charges!) gives you an additional useful element of diversification and risk reduction. If no additional charges apply and cashflow allows for it then making monthly contributions may be better than annual lump sum contributions - money invested earlier, pound/euro cost averaging and all that jazz... Hope this helps.


----------



## wowser (4 Jul 2003)

>Hope this helps
It does, thanks!


----------



## Karen Mc Dougal (4 Jul 2003)

*Executive pension*

I wasn't aware that QL actually did pensions for company directors? :eek


----------



## ClubMan (4 Jul 2003)

*Re:  Executive pension*

Is a company director restricted from taking out a "normal" personal pension plan? Maybe "executive" does mean something after all?


----------



## Company Director (4 Jul 2003)

*"Executive" Pension*

I have an "executive" pension with QL.  This is a company pension plan basically but called executive if you are a proprietary director (to make one feel more important!!).

I have tested the performance of my pension against the underlying indices (S&P500 and Eurostoxx 50) and have found that if there is hidden charges they must be very small indeed.  My pension is following the index (less 1.2% for S&P and 1% Euro) almost exactly.  In fact because of market fall and the fact that the proportion of the charge is taken daily on the fund value the management change has worked out at much less than 1% (1.2%) of premium in.  

I am seriously thinking about putting this years contribution in early this year as it seems like there is a slightly more optimistic feeling about equities at the moment (I know, I know there is no point trying to time the market!).


----------



## M3 (4 Jul 2003)

*Re:  Executive pension*

Clubman,

Yes there is a difference , the company can make a payment directly into the pension fund without PRSI/income tax being deducted for a proprietary  director, the limits on payments are different as well and it must be approved by the revenue before you start.

I started mine about 4 years ago so my memory on the details is a bit fuzzy...

M3


----------



## Company Director (4 Jul 2003)

*Add on*

On your point Clubman.

In the past it was better (but not a requirement)for a proprietary to take out a company pension plan as full PRSI relief was available (not on Personal Pension).

Now I believe you can obtain PRSI relief on company contributions to a PRSA (but with BIK administration) and a Personal Penson (RAC) but again with additional admin on the part of the policyholder.  It is administratively easier to go the company pension route.

The company pension is also more flexible, if the company has a good year it is a mechanism for transferring value from the company to the owner without having to go through increased salary/income tax etc


----------



## Company Director (4 Jul 2003)

*Post crossed*

Sorry, M3


----------



## ClubMan (4 Jul 2003)

*Re: Post crossed*

Thanks all - that clarifies my earlier query regarding the term "executive pension".


----------



## Alan Moore (7 Jul 2003)

*QL or Arklife or Neither*

Questions,
How old are you
When do you hope to retire
What premium are you thinking of paying


----------

