# How to get a better Company DC Scheme



## AJAM (20 May 2021)

Hi All,

I work for a small company who provide a DC pension scheme with Irish Life Funds administered via Invesco.
After a recent report about fees eating the majority of pension investment returns, I was asked to look at our scheme.

Our fees are as follows
Annual fee of 0.55% on 10 Select funds, otherwise annual fee of 0.65% (Irish life get this)
Fee of 3% on Every contribution (Invesco get this)
•Monthly Policy Fee: €3.93 (Not sure who gets this)
•Monthly Pension Authority Fee €0.66 (Govt get this)

We are generally happy with the fund choice from Irish life and the AMC of 0.55 or 0.65%. We have access to a number of passive Index funds (although the seem to be consistently underperforming their benchmarks by about 1%, but that might be a topic for another discussion thread). What I've never been happy with is the 3% Allocation fee on every Contribution. It seems like a huge fee for taking and then delivering our money to Irish life a few weeks later. Possibly Invesco offer some advice but I don't think any of us have ever talked to them (that may be on us rather than on them) but certainly it's not value for money.

I did a Google search looking for alternative options, but to no avail. All the results were either for PRSA's or very basic explanations of what a pension is.
So who can I talk to about possibly moving our pension scheme to reduce our fees?
And does anybody out there have a current employer scheme with better fees that they can recommend?

Thanks


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## Marine1 (20 May 2021)

I was going to post another thread but ill piggyback on this one if thats ok?

Is 0.65% an ok charge for a small (circa 25 member) DC scheme?


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## FintanJ (20 May 2021)

How many employees in the company ?


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## Steven Barrett (21 May 2021)

This is something that I come across quite often. An employer tells an employee that they have a pension scheme in place for them but the employee are the ones that pay for it. A lot of the time it is due to the employer not being aware of the options available to them. I would say to your employer that 3% of every contribution you make it being deducted in fees to pay Invesco. Will you offer to pay Invesco a fee instead so you can have 100% of your money invested. 

I would also mention that the Irish Life funds underperform their benchmark (which isn't the MSCI World like every other global equity fund, but one they create themselves and still can't match!) and you are losing money by being with them. Irish Life have a grip on the group pensions market, so there are tens of thousands of pension investors losing out...and they own Invesco too. 


Steven
www.bluewaterfp.ie


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## AJAM (21 May 2021)

Thanks Steven,
Yes I'll definitely ask Invesco how we can move to 100% allocation.
But are there other providers the business could approach instead of Invesco?
For instance could we approach Zurich (or someone like that) directly?

Also I'd be interested to know what other people are paying in fees on their DC schemes.


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## GSheehy (21 May 2021)

@AJAM You need to say how many members are in the the existing scheme.


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## AJAM (21 May 2021)

GSheehy said:


> @AJAM You need to say how many members are in the the existing scheme.


Sure there are approx 20 in the scheme and the total size is >2Million. Could you explain why the number of members is important? Does the number of members impact the fees?


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## Steven Barrett (21 May 2021)

AJAM said:


> Thanks Steven,
> Yes I'll definitely ask Invesco how we can move to 100% allocation.
> But are there other providers the business could approach instead of Invesco?
> For instance could we approach Zurich (or someone like that) directly?
> ...



If your employer is willing to pay a fee instead of the members paying a commission, Invesco shouldn't have any issue in changing the allocation rate to 100%. Just tell them that is what you want to do. You can also tell them you are not happy with the performance of Irish Life and want to move. Remember, Invesco work for the scheme and if you are not happy, you can tell them to move or you can find someone else to look after the scheme. 



AJAM said:


> Sure there are approx 20 in the scheme and the total size is >2Million. Could you explain why the number of members is important? Does the number of members impact the fees?


Economies of scale. As with a lot of things in life, the bigger you are, the more you can influence price. 


Steven
www.bluewaterfp.ie


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## FintanJ (21 May 2021)

I was a member of an Irish life scheme with 20 employees, 100% allocation but fund size was about €4m.


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## AJAM (21 May 2021)

Steven Barrett said:


> If your employer is willing to pay a fee instead of the members paying a commission, Invesco shouldn't have any issue in changing the allocation rate to 100%. Just tell them that is what you want to do. You can also tell them you are not happy with the performance of Irish Life and want to move. Remember, Invesco work for the scheme and if you are not happy, you can tell them to move or you can find someone else to look after the scheme.


Would that be a one off fee or an ongoing fee?


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## AJAM (21 May 2021)

FintanJ said:


> I was a member of an Irish life scheme with 20 employees, 100% allocation but fund size was about €4m.


Thanks Fintan, do you remember if you were directly with Irish Life or working through someone like Invesco?


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## FintanJ (21 May 2021)

Directly with Irish life.


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## Steven Barrett (21 May 2021)

AJAM said:


> Would that be a one off fee or an ongoing fee?


Ongoing.


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## DBL2018 (22 May 2021)

the Company should review their arrangement and get new quotes, a 3% deduction along with a policy fee and a 0.55% AMC is high for that size scheme in the current market.  Even with the company paying no fees.  They don’t have to stick to Invesco.

The life assurance companies would deal with this directly or use a Broker to check the market.  Don’t just go to one insurance company.


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## AJAM (24 May 2021)

Thanks DBL.
Can anyone recommend a broker?

Also I'd love to hear what other people are paying in fees.
Or what you think is a reasonable fee.


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## AJAM (31 May 2021)

How to get a better Company DC Scheme?  - Just Ask!​So we approached Invesco and stated that we were not happy with the 3% contribution charge.
They have agreed to reduce it to 1.5%. 

I would encourage anyone who is paying a 3% contribution charge to talk to your employer and get them to ask for a reduction.


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## Mechman (3 Jul 2021)

My employer wants to start contributing  to a pension scheme, but it’s only 5% of salary, for 4 staff members, the site staff are in the CWPS scheme run by the CIF. 

Where should I start looking for such a small scheme, should I just go to any broker as it will be tiny?

I have a pension in place myself where my deductions are made by payroll, the employers contribution for me can’t be made to my own personal pension I’m assuming?


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## AJAM (6 Jul 2021)

Hi Mechman, I've been researching this a lot lately. And it seems to me that the best option for small schemes is to join a Master Trust.
Master trusts group together lots of employers under the 1 scheme umbrella. This allows small employers to benefit from economies of scale. 
The regulator has also indicated that the future of Irish pensions will be bigger Master Trusts and less small employee schemes.
You can read more about Master trusts on the link below. Actually I can't post the link but if you search for APT Master Trust, you'll find it.


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## cremeegg (6 Jul 2021)

Mechman said:


> the site staff are in the CWPS scheme run by the CIF.


Lucky them, thats a great scheme.


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## AJAM (14 Sep 2022)

Just an update on How to get a better Company DC Scheme.
We moved our company scheme over to the APT Mastertrust scheme.
Our new fees are as follows

Annual fee of ~ 0.55%  (APT get this)
Fee of 0% on Every contribution (i.e. 100% Allocation)
Monthly Policy Fee: €0
Monthly Pension Authority Fee €0.66 (Govt get this)
These changes in fees seem small but over 20 years mean an additional ~40K in your pension pot (at max contribution).  Over 25 years it's closer to an additional 60K.

The switching process did take a long time (approx. 7 Months), but apart from the length of time it took, it was surprisingly easy.

I would recommend to anyone who is paying high fees in their company pension to suggest to their employer to consider switching.


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## Steven Barrett (14 Sep 2022)

IORPS II has turned company pensions on its head in Ireland. It was the reason the Pensions Authority needed to shut down one person schemes and get everything moved to a Master Trust method. Under the Master Trust, the allocation is 100%. This is a great thing. The annual management fee will very much depend on the contributions to the scheme. 

You never mentioned how much the fund manager gets? Are they getting some of the 0.55% that APT are getting or is this in addition? 

If you are paying €0.66 Pensions Authority fee, you must be in a scheme with between 501 - 1,000 members. they have a flat fee of €6,000 a year for the scheme. Schemes will less than 500 members pay €12 a year. For schemes of 1,001+, they pay €6 a year. 


Steven
www.bluewaterfp.ie


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## interested21 (14 Sep 2022)

My employer's scheme is also with Invesco and the charges seem a bit too good to be true which makes me suspicious that I'm being ripped off somewhere.

50 members
$1M pot
The funds available are combinations of a World Equity fund, Bonds and Cash at different allocations for different risk levels
The fee is 0.3% per annum for most funds
There are apparently "no additional charges"
100% allocation

Have we got a great deal or am I missing something?


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