# Pension charges need help



## rohora (13 Feb 2008)

I took a personnel pension out with Eagle Star in 1997 and i fear that it might have high charges on it
I am not great with pensions and costs etc etc
i also have a PRSA pesion with work with Irish Life
I did the minimum with the PRSA in work as my company contributes so free money
When Irish Life where in they said that my eagle star pension probably has high charges as it was the older type pension and that i would be better to stop paying into it and put my contributions into the PRSA

i have 2 questions
1. i need to find out /talk to somebody who knows about pensions and can advise me on the older Eagle Star pension costs etc etc and what to do with it if it has high charges, i have all the documentation but just dont understand in € terms how much its costing me
2. should i put my money into the PRSA instead so avoiding the high charges and then looking at how should i take my pension fund from Eagle Star and move it to Irish Life costs in doing this etc etc

can provide info if needed

Help/pointers would be great


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## ClubMan (13 Feb 2008)

rohora said:


> i have all the documentation but just dont understand in € terms how much its costing me


What does this documentation say?


> 2. should i put my money into the PRSA instead so avoiding the high charges and then looking at how should i take my pension fund from Eagle Star and move it to Irish Life costs in doing this etc etc


Are you still making regular contributions into the _ES _pension? If so and the charges are higher than the _IL _pension then it would probably make sense to stop and make the contributions to the _IL _pension instead. What charges apply on the _IL _pension?

I'm not sure if you can transfer from a personal pension plan into a _PRSA_.

You should get independent professional advice if necessary. _IL _sales people are not really independent no more than any other tied agents.


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## rohora (13 Feb 2008)

It says Management Charges
The company's investment expences relating to fund management are recouped by means of a 0.4% per annum management charge to Initial and Accumulator Units
Eagle star recover the initial expenses and charges involved in setting up a new policy by investing the first two years premiums(together with the first two years of any subsequent increase in premium) in initial units and these bear an additional managment charge of 4% per annum 
full details of all managment charges are contained in tour original policy document.The management charge is based on a percentage of the relevent unit account as opposed to being a fixed monetary ammount
ploicy fee
ongoing admin expences are met by means of a policy fee which currently stands at €3.68 per month
16 March 2006

Are you still making regular contributions into the _ES _pension? YES
What charges apply on the _IL _pension?will check out tonight and come back to you

_IL _sales people are not really independent no more than any other tied agents. thats why i am asking


You should get independent professional advice if necessary.Can you give me advise who can do this for me and the cost i should expect

Thanks


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## ClubMan (13 Feb 2008)

Ah - initial units. This is sounding bad already. Initial units are often an opaque mechanism designed to hide hefty charges. Is there any penalty if you stop making ongoing contributions and switch to your _IL _pension (if the charges there are competitive/better)? If you stop making regular contributions will the monthly policy fee continue to be charged (through the encashment of units if necessary)? 

I'd guess that the _IL PRSA _charges are probably the maximum for a standard _PRSA _- i.e. 1% annual management charge and 5% of each contribution.


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## rohora (14 Feb 2008)

There are 2 charges on my PRSA 
1.A charge of 5% of any regular payments
2.A yearly charge ,set out as a percentage of the fund built up by these payments.This percentage of the fund built up by regular contributions depends on the fund or funds you invest in and is ser out in the table below

most of the fund charges are 1.35% and 5 of the funds have a slightly higher charge 1.85%,2% ,1.7%,1.6%


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## ClubMan (14 Feb 2008)

This must be a non standard _PRSA _since the charges on standard _PRSAs _are capped at 5% and 1%?


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## LDFerguson (14 Feb 2008)

As ClubMan says, the Irish Life PRSA is a Non-Standard PRSA.  The Irish Life Standard PRSA features charges of 5% per contribution and 1% of the fund per year.  

In my opinion, the only justification for selling someone a Non-Standard PRSA is where the customer specifically requests a fund that is not available under the Standard PRSA.  

Did you specifically request an Irish Life fund that wasn't available on their Standard PRSA?


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## rohora (14 Feb 2008)

this was all done by the company i work for so no imput into the type but having a non standard its not a bad thing just a slightly higher charge ??

getting back to my eagle star pension should they transfer it a lower costing pension if i request it ??

should eagle star if i request it give the actual cost € to me not just the % they charge etc etc as i have never had a statment of the actual costs or is this something  they dont give out

should i just go and get an authorised advisor for help


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## ClubMan (14 Feb 2008)

rohora said:


> this was all done by the company i work for so no imput into the type but having a non standard its not a bad thing just a slightly higher charge ??


When the same or similar funds are available for a lower charge elsewhere then it is a bad thing in my opinion. But if this is the one that your employer has chosen then you don't have much choice if you want to avail of their contributions. Just make sure that the higher charges don't erode the benefit of the employer contributions to the extent that they might cancel out and you may be better off with a "standalone" 0%/1% _PRSA _of your own. I'm not sure if you can contribute the bare minimum to the employer _PRSA _and then have a separate standalone (e.g. 0%/1%) _PRSA _for _AVCs_ (in which case you would have to claim tax and _PRSI _relief yourself).

The _ES _situation may be complicated and may merit professional advice. However from the sounds of things it may well be worth investigating further if it's worth ceasing regular contributions to it if the charges are hefty. It's hard to say given the info posted so far. I'm not sure what the options for transferring this to another lower charging _ES _or other provider pension might be.


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## LDFerguson (14 Feb 2008)

It galls me to hear that you were sold a Non-Standard PRSA with higher charges without any real justification that I can see. It generates more commission for the sales guy. This sort of practice does no favours for the pensions industry. As you say, the Irish Life Non-Standard PRSA is not a _bad_ product, but you're paying an extra 0.35% to 0.85% per year for a benefit (of arguable, if any value) you never even requested. This might not seem like a lot, but if you accumulate a fund of €100,000 over time, that's an extra €350 to €850 per year. 

Anyway, send an e-mail to customerservices@eaglestarlife.ie quoting your policy number and ask them the following: - 

(1) Current nominal fund value. 

(2) Current transfer value (the value that they would give if you transfer it elsewhere)

(3) What fund are you invested in?

(4) List of all charges that apply to your policy on an ongoing basis. 

Cut and paste their reply here.


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## Fisher Black (14 Feb 2008)

Perhaps the employer requested a Non-Standard PRSA because it is clearly the Employer-appointed PRSA provider and perhaps they have agreed with Irish Life (the PRSA provider) to call out to the company to keep the employees/PRSA holders regularly informed of their PRSA entitlements, options at retirement, fund values etc...

To make such a rash conclusion (that the decision was made to "generate more commission for the sales guy") as the one made above seems unfair IMO.


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## oopsbuddy (14 Feb 2008)

Fisher Black said:


> To make such a rash conclusion (that the decision was made to "generate more commission for the sales guy") as the one made above seems unfair IMO.



Liam didn't say the decision was made TO generate more commission, just that an end result is that it does generate more commission for the sales guy. No unfair comment there, just a statement of fact. If I remember correctly, the full range of compliance issues apply to the sale of non-standard PRSAs, ie, full individual fact-find, research, recommendations and reasons why etc. Did the IL sales staff follow these procedures, and if so, was it a conscious decision of the OP to choose the non-standard over the standard option?


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## Fisher Black (14 Feb 2008)

Well he did say this:


LDFerguson said:


> This sort of practice does no favours for the pensions industry. As you say, the Irish Life Non-Standard PRSA is not a _bad_ product, but you're paying an extra 0.35% to 0.85% per year for a benefit (of arguable, if any value) you never even requested.


 
For all we know the employer made a conscious decision to have a Non-Standard PRSA so rushing to conclusions that there is something negative going on here is completely unfounded at this stage.

It's the Employer's decision (not the individual) to appoint the PRSA provider to whom the Employer is willing to make contributions.

Buddy - missiong out an Employer contribution of (let's say) 5% of salary to reduce a fund management charge of an extra (let's say) 0.5% on the fund would not be a smart move so I don't think there would have been any problems for the advisor to recommend this option.


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## LDFerguson (14 Feb 2008)

Fisher Black said:


> It's the Employer's decision (not the individual) to appoint the PRSA provider to whom the Employer is willing to make contributions.


 
True - so do you think that an Employer can nominate Irish Life as the provider _and_ specify that employees can only avail of Non-Standard PRSAs in order to qualify for the Employer contribution?


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## Fisher Black (14 Feb 2008)

Yes - the Employer chooses the contract to which it will contribute, if it elects a Non-Standard PRSA then so be it.


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## LDFerguson (14 Feb 2008)

Sounds unlikely in the extreme to me.  

All employers must enter into a contract with a PRSA provider so that access to at least one standard PRSA will be available for all “excluded employees” as and from September 2003.  In addition, employers must notify ‘excluded employees’ that they have a right to contribute to a Standard PRSA.

So are you suggesting that rohora's employer might have appointed a provider for Standard PRSAs and notified all employees of the availability of the Standard PRSA, but then said that if an employee wants to qualify for employer contributions, they must choose the Non Standard PRSA option?  

Why on earth would an employer do that?  

Let's ask rohora: - 


Did your employer (or their PRSA agent) offer you both Standard PRSAs with lower charges or Non-Standard PRSAs with higher charges, making it clear that you would only qualify for employer contributions if you chose Non-Standard?
Did your employer (or their PRSA agent) explain the difference between Standard and Non-Standard PRSAs to you?


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## Fisher Black (14 Feb 2008)

The Employer could easily want to do that because:

It is being paternalistic by offering an Employer Contribution & it may also be paternalistic by expecting the Advisor/Provider to make regular presentations on PRSA options, investment performance etc to PRSA holders...the Employer may not be able to afford/want to pay for the cost of this advice so it may have agreed with its Advisor/PRSA Provider that this cost would be met by a higher fund management charge.


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## LDFerguson (14 Feb 2008)

I strongly suspect that forcing an individual to choose a Non-Standard PRSA over a Standard PRSA, by threat of withdrawing employer contributions if the employee chooses the latter, would be something that the Pensions Board would consider illegal.  I can ask them if you want.  

I'll ask one more question of rohora - apart from the original sales drive, do you get regular presentations from the PRSA advisor with updates on performance?  (Ignore half-yearly statements from Irish Life which are automatic for all PRSAs, Standard or Non-Standard).


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## Fisher Black (14 Feb 2008)

No need to ask them on my behalf, I am in an Occupational Scheme and very happy with it.

However I do speak to The PB and I am quite sure an Employer has the right to insist on any type of PRSA it wants for the PRSA that it is CHOOSING to contribute to - same as it can choose not to contribute to a PRSA for them at all (of course it would still have to provide access through payroll to at least one Standard PRSA with NO Employer Contributions in this instance).


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## ClubMan (14 Feb 2008)

Where an employer will only make contributions to a non standard _PRSA _and the employee contributes the bare minimum to avail of such employer contributions can the employee then open a "standalone" _PRSA _with lower charges for additional personal contributions and claim tax and _PRSI _relief separately?


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## Fisher Black (14 Feb 2008)

Yes.


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## ClubMan (14 Feb 2008)

So that might be the (or an) answer here?


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## Fisher Black (14 Feb 2008)

Yes although I don't think the OP has a problem with the Irish Life policy...I think they have a problem with the ES policy!


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## rohora (14 Feb 2008)

i cant remember being offered a choice it was all done for us and then he came in to speak to us and see who wanted to take it and explained it to us

my problem is yes with my ES policy and costs ,can i switch to a lower cost ES or just move it somewhere else

have emailed ES requesting info from below so just waiting


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## LDFerguson (14 Feb 2008)

rohora said:


> i cant remember being offered a choice it was all done for us and then he came in to speak to us and see who wanted to take it and explained it to us


 
Seems my original thoughts about this transaction were correct after all.  

Let us know the reply from Eagle Star.


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## Fisher Black (14 Feb 2008)

LDFerguson said:


> Seems my original thoughts about this transaction were correct after all.


 
How did you reach that conclusion - you're very quick to pat yourself on the back!

It seems pretty clear that the PRSA Members are receiving a higher level of attention than normal because their Employer advised the PRSA Provider or Pension Adviser that Non-Standard PRSAs were to be put in place.

By the way - our lawyer has confirmed that the Company can insist on a Non-Standard PRSA if it desires, in the same way it can decide on no Company contribution at all if it desires.

Seems like your initial thoughts were quite incorrect.


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## LDFerguson (14 Feb 2008)

If a Non-Standard PRSA is recommended to a client, it must be clearly explained to the client why a Non-Standard PRSA is better _for the client_ (not the agent or employer) than a Standard PRSA.  

Rohora has said s/he can't remember even being offered a choice.  

So the lovely PRSA advisor didn't offer the choice of a Standard PRSA, never mind explain the difference between a Standard and a Non Standard.   

Q.E.D.


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## Fisher Black (14 Feb 2008)

As I already pointed out, given the choice between an Employer contribution to my PRSA of:

(say) 5% of salary and a (say) 1.5% fund management charge...Non-Standard PRSA
OR

0% of salary and a 1% fund management charge...Standard PRSA
I guess it's a pretty simple decision to go for the former (given that it is clearly better for *THE CLIENT* because of the extra contribution) no matter who explains it to you


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## LDFerguson (14 Feb 2008)

So your point is that the advisor was acting correctly in evading his legal obligation to explain the difference between Standard and Non Standard to the client, because the Non Standard is better?

(By the way, you're assuming that the employer is not prepared to offer employer contributions to Standard PRSAs.  Nowhere in this thread is that said.)


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## Fisher Black (14 Feb 2008)

I am saying that it's an easy decision to go for Non-Standard over Standard if there is an Employer Contribution to the Non-Standard and not to the Standard.

I just wanted to rubbish the remarks you made earlier in this thread about this all being to do with "commission" and bringing a bad name to the industry.

I have no knowledge of the specifics of this Company's nor of the Adviser's situation here, so cannot comment on whether any law was broken (as you imply above)...you don't have the knowledge of this specific situation either, hence your earlier remark was baseless, hence to coin your terminology: Q.E.D.


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## LDFerguson (14 Feb 2008)

I suggested that the advisor had not acted correctly.  I was proved right.


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## Fisher Black (14 Feb 2008)

You suggested it was to do with commission.

You seem to have no understanding of the background to the case.

You were wrong when you said an Employer cannot choose one type of PRSA over another.

You were right on something you said were you?

I am not sure but will take your word on it.


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## LDFerguson (14 Feb 2008)

Fisher Black said:


> I am not sure but will take your word on it.


 
If you can't see it then I have no further interest in explaining it to you.


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## Fisher Black (14 Feb 2008)

Go on so, I will leave you off this time, once you can see it the rest of us will have to take your word for it.


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## LDFerguson (14 Feb 2008)

Nice try.


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## Fisher Black (14 Feb 2008)

rohora said:


> my problem is yes with my ES policy and costs ,can i switch to a lower cost ES or just move it somewhere else
> 
> have emailed ES requesting info from below so just waiting


 
Rohora

Was there a broker on your ES Policy?

That might be your quickest route for answers about that policy, IF there was a broker that is...


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## rohora (14 Feb 2008)

i was dealing with a guy who works for ES and still does


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## oopsbuddy (15 Feb 2008)

Fisher Black said:


> I just wanted to rubbish the remarks you made earlier in this thread about this all being to do with "commission" and bringing a bad name to the industry.



Please see my earlier post:



oopsbuddy said:


> Liam didn't say the decision was made TO generate more commission, just that an end result is that it does generate more commission for the sales guy. No unfair comment there, just a statement of fact.


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## LDFerguson (18 Feb 2008)

Oopsbuddy - Fisher Black understands this - he just has a hard time admitting it.


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## Duke of Marmalade (18 Feb 2008)

_Fergie_ is spot on. 

The ES policy has the conventional charging structure of high initial and low onging charges, possibly even loyalty bonuses. Could be very bad advice indeed to switch now that the upfront charges have been suffered.

I do hope the sales agent has done a proper analysis of the ES policy to justify the claim that switching to a Non Standard PRSA is cost effective. 

But the real issue is that it seems that a Non Standard PRSA is being promoted here without any attempt whatsoever to explain that they are far more costly than a Standard PRSA.

If, and I very much doubt it, the employer is forcing its contribution into a Non Standard PRSA Fund then the employee should implement a standing instruction to immediately switch the funds to a Standard PRSA Fund. It is after all the employee's *Personal* Retirement Savings Aaccount.

Does even the employer know the true difference between Standard PRSAs and Non Standard PRSAs?


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## rohora (25 Feb 2008)

I do hope the sales agent has done a proper analysis of the ES policy to justify the claim that switching to a Non Standard PRSA is cost effective.

No he did not it was a comment that he made that the ES was taken out a couple of years ago and that older type pensions had higher costs and the best way to stop that was to stop paying into it but did not discuss it with me at all

still waiting on the info from ES, had to send another email asking where the info is


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## LDFerguson (25 Feb 2008)

rohora said:


> No he did not it was a comment that he made that the ES was taken out a couple of years ago and that older type pensions had higher costs and the best way to stop that was to stop paying into it but did not discuss it with me at all


 
This is simply wrong and reinforces my earlier negative opinion of the guy.  Just because your Eagle Star policy is a couple of years old it does *not* automatically follow that it has higher charges than the Irish Life PRSA.  In my own practice, we've been arranging Personal Pension plans at discounted charging structures for over ten years - I know other brokers who have been doing so for longer.  How does he know what your Eagle Star charging structure is like?  

Maybe your Eagle Star policy has higher charges than the Irish Life PRSA, maybe it doesn't.  The point is - you can't and shouldn't make a broad statement like he did without taking the time to get the facts, which you're doing now.


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## rohora (28 Feb 2008)

(1) Current nominal fund value. 

(2) Current transfer value (the value that they would give if you transfer it elsewhere)

(3) What fund are you invested in?

(4) List of all charges that apply to your policy on an ongoing basis.


Not a lot of figures just the charging structure


Fund Value €43,364.61
Transfer €37,148.74

Investment funds

Rainbow Route to retirement opion was selected
premiums were initally invested in the dynamic pension and investment fund
with effect from 17/04/2005 premiums were redirected to the performance pension and investment fund

dynamic fund  is high equity content
performance is medium risk/return

The transfer value may include a special bonus which can be reduced or withdrawn without prior notice

If your policy contains unit holdings in the SuperCAPP Fund,these values are based on an interim dividend of 4.00% for the year commencing 1 January 2007 and until the final dividend is declared by the Company Actuary

Premium Spread
I dont get any numbers just there Charging Structure
The percentage of regular premiums used to purchase unit at the ruling offer price is 100%

bid/offer spread
There is a 5.00% difference between the price at which the premium purchases units compared to the bid price,which is the price at which units are sold

Management Charges
The companys investment expences relating to the fund management are recouped by means of a 0.40% per annum management charde to Initial and accumulator units
ES recover the initial expences and charges involved in setting up a new policy by investing the first 2 years premiums(together with the first two years of any subsequent increase in premium) in ititial units and these bear an additional management charge of 4.00% per annum

policy fee 
ongoing admin expenses are met by means of a policy fee which currently stands at €3.82

also a bit of information of difference in fund value and transfer value


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## LDFerguson (29 Feb 2008)

From what you've posted above, there were some fairly hefty charges imposed on contributions paid to date.  But you can do nothing about this now as it's in the past.  

The ongoing charges on the fund don't appear too severe and look like they add up to less than the 1.35% or more charged by the Irish Life Non-Standard PRSA.  

I'd suggest you stop making any more contributions to this Eagle Star policy but leave the fund invested in it - it's known as making this policy "paid up".  Your existing fund will continue to participate in the relevant fund growth until you retire.  

Your previous posts in this thread suggest that you are not entirely clear on what fund(s) your Irish Life PRSA invests in, nor why a Non-Standard PRSA (with higher charges) was selected.  Based on this, I'd also recommend that you go back to the Irish Life sales guy and tell him that you want to re-write your Non-Standard PRSA as a Standard PRSA (which has lower charges) and he can talk you through the fund choices available.  If you're not sure which one to pick, there's a Default Investment Strategy to choose.  If he resists this approach, tell him that he didn't make it crystal clear to you why a Non-Standard PRSA was better for your requirements than a Standard PRSA (which he should have) and that you're considering making a complaint.  

Don't forget to re-direct your current Eagle Star monthly contribution into your Standard PRSA.  

These are suggestions on an internet board, based on the information available on the board.  You should take professional advice before making any financial decisions.


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## rohora (29 Feb 2008)

Thanks LDfor that ,can you suggest where i can get this information and roughly what it should cost


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## Bronte (3 Mar 2008)

There was a very interesting article by Shane Ross is yesterday's Sunday Independant on pensions which would scare anybody from investing in pensions in Ireland.  Might be of interest to the OP.


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## Dave Vanian (3 Mar 2008)

That article can be read here.  Shane Ross seems to be making the point that if pension funds drop in value, the fund managers should not hold their annual dinner.  He doesn't seem to grasp the most basic of investment principles - fund values will go down as well as up from time to time.


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## ClubMan (3 Mar 2008)

rohora said:


> Thanks LDfor that ,can you suggest where i can get this information


From a good multi-agency intermediary or authorised advisor specialising in pensions I presume? 


> and roughly what it should cost


Shop around. You need a full advisory service (and not simply an execution only service with possibly some basic advice) by the sounds of things so it could cost a few bob.


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## Bronte (3 Mar 2008)

I thought Shane Ross's point was that they shouldn't celebrate when their funds were such dismal performers last year compared to other countries. And that the Irish funds were too heavily subscribed to particular shares due to the cosy relationship between the fund managers and the companies whose shares they recommended. I'm not sure but is it possible to invest in a pension with the Irish providers that is not linked to Irish companies/too heavily on the ISEQ. 
OP I think LD is the type of person who specialises in pensions and he's always giving good advice on here (in my opinion) so maybe you could PM him. At least he speaks in plain English which is always a good place to start.


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## Conan (3 Mar 2008)

Bronte,
It is certainly possible to invest in funds with little or no exposure to Irish Equities. Most providers offer a choice of global equity funds, so it is possible to invest in a mix of differing markets.

As for Shane Ross, I dont suppose that his paymaster (IN&M) cancelled their Christmas party just because their stock fell some 50% in the last year. Did the great and good of the IN&M Board take any reduction in their income to compensate for such a performance? Did we see him exercise his journalistic independence to critically analyse why that stock performed so poorly? No, all we saw was a piece of "puff journalism" decrying Denis O'Brien's share purchase in IN&M and for for having the temerity to challenge the cosy O'Reilly family cartel.


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## ClubMan (3 Mar 2008)

Does anybody really take _Senator Ross _seriously as a financial journalist these days?


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## werner (3 Mar 2008)

ClubMan said:


> Does anybody really take _Senator Ross _seriously as a financial journalist these days?


 
But the points he makes in his article are excellent and I would 
recommend a read of the article to anyone curious as to where a portion of the "management" fees go to.


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## rohora (4 Mar 2008)

i had a word with LD and he confirmed what i thought , the pension fund management costs where OK but it was there take on the contributions that was the killer and parking the ES was the way to go and talk to Irish Life about the fact that i have a non standard PRSA and not a standard and pay into that

so a big thanks to him


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