# Pension Option Query



## TRS30 (6 May 2014)

One of my previous employers (insurance company) is winding up their pension scheme (I worked for an offshore part that is closed down). I have been given three options

-transfer sum to my current employers pension
-Take a Buy Out bond with my older employer
-Take a Buy Out bond with another company

Other than charges is there any anything else to consider between a buy out bond and move to my current employers pension? i.e. options on retirement etc. 

If not, do I have to ring all the insurance companies to get the charges etc for their Buy Out bond?

Thanks


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## Baracuda (6 May 2014)

If the old scheme is a DB and your current employer operates a DC, you would currently have more options at retirement such as ARF options so this would be one of the only reasons to transfer into your current employer's scheme however this is being looked at at the moment.

If you transfer into the new scheme you are then bound by the new schemes rules i.e. you cannot take benefits before retirement age.

If you transfer into a BOB you can take benefits from age 50 regardless of whether you have retired or not.

Ring around the various pension companies: Yes you can do that or you can ring a few brokers and see what they can do for you. Personally I would do both if your fund is over 250K


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## TRS30 (6 May 2014)

Thanks Baracuda.

Should have mentioned that both old scheme and current scheme are DC.

The only charge on the BOB been offer by old employer is a AMC of 0.55%. This seems very competitive. 

Fund is circa €75K


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## LDFerguson (7 May 2014)

You might find something of interest here.


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## TRS30 (9 May 2014)

Thanks Liam.

I think I will go for the BOB option as will have access to the funds at 50 (if needed) and also gives me some diversification from my current employers scheme. 

I just need to get all the charges for BOB's from the various companies.


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## LDFerguson (9 May 2014)

TRS30 said:


> I just need to get all the charges for BOB's from the various companies.



As I'm a Financial Broker myself, I guess my comments should be assumed to be biased.  But in this instance, I think a good broker could save you a lot of time and effort, in that a good broker should be able to give you details of the charges of all the various BOB companies in one enquiry.  

A second point is that there are a lot of charging variations possible.  Most BOB providers have several charging options on their BOB product, so multiply that out by nine BOB providers and you've a lot of possible permutations.  

A final point is that if you ring a BOB provider directly, they will quote you their terms for setting up your BOB as a "Direct" client.  In a lot of cases, that means that they'll pay commission to the employee that deals with you, or just keep it themselves.  It's a common misconception that you'll get lower charges by going directly to a provider company than going to a broker.  In a lot of cases, the reverse is actually true as the broker may well take less commission than the provider if you go directly.


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## TRS30 (14 May 2014)

LDFerguson said:


> As I'm a Financial Broker myself, I guess my comments should be assumed to be biased.  But in this instance, I think a good broker could save you a lot of time and effort, in that a good broker should be able to give you details of the charges of all the various BOB companies in one enquiry.
> 
> A second point is that there are a lot of charging variations possible.  Most BOB providers have several charging options on their BOB product, so multiply that out by nine BOB providers and you've a lot of possible permutations.
> 
> A final point is that if you ring a BOB provider directly, they will quote you their terms for setting up your BOB as a "Direct" client.  In a lot of cases, that means that they'll pay commission to the employee that deals with you, or just keep it themselves.  It's a common misconception that you'll get lower charges by going directly to a provider company than going to a broker.  In a lot of cases, the reverse is actually true as the broker may well take less commission than the provider if you go directly.



Thanks again Liam. 

In your experience would a broker charge to do this research or take a flat fee rather than commission?


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## LDFerguson (14 May 2014)

TRS30 said:


> Thanks again Liam.
> 
> In your experience would a broker charge to do this research or take a flat fee rather than commission?



That's very much at the discretion of each individual broker.  Commission is still by far the most common method by which brokers get paid.  There are some who charge fees.  There are others who have a "hybrid" method of charging, e.g. a fixed fee for work, from which any commissions received for implementing financial products are deducted.  

For what it's worth I wouldn't get too hung up on the mechanism by which your broker gets paid, i.e. direct fee or commission.  As long as the cost to you is transparent, it shouldn't really matter (to you or the broker) whether that fee comes out of your BOB fund as commission or you write a cheque.  In other words, if a broker tells you from the start that s/he's going to charge €X for doing the job you want, then it shouldn't really matter whether you write a cheque for €X and there's no commission deducted from the BOB, or you agree that €X is deducted from the BOB fund and paid to the broker as commission.  If anything, the latter has certain cashflow and tax-efficiency advantages  for you.


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## TRS30 (15 May 2014)

LDFerguson said:


> That's very much at the discretion of each individual broker.  Commission is still by far the most common method by which brokers get paid.  There are some who charge fees.  There are others who have a "hybrid" method of charging, e.g. a fixed fee for work, from which any commissions received for implementing financial products are deducted.
> 
> For what it's worth I wouldn't get too hung up on the mechanism by which your broker gets paid, i.e. direct fee or commission.  As long as the cost to you is transparent, it shouldn't really matter (to you or the broker) whether that fee comes out of your BOB fund as commission or you write a cheque.  In other words, if a broker tells you from the start that s/he's going to charge €X for doing the job you want, then it shouldn't really matter whether you write a cheque for €X and there's no commission deducted from the BOB, or you agree that €X is deducted from the BOB fund and paid to the broker as commission.  If anything, the latter has certain cashflow and tax-efficiency advantages  for you.



While I agree with you (I use to work for a broker albeit over 10 years ago and haven't used one since) I would rather keep any payment outside the BOB as the effect of taking even a small amount from the fund now will have (hopefully) a large impact in 30 years time. 

I think I will wait for the ex employer to confirm the charges on their BOB and take it from there. If they are less then 0.75% then I would be tempted to leave it with them as there is 100% allocation and no fee/commission.


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