Are my pension fees good value?

N

Ndiddy

Registered User
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Looking at my Irish Life defined contribution plan investment guide charges:
.27% AMC for Developed World Equity Fund
.16% AMC for Annuity Objective Fund (Government and Corporate Bonds)
70 euro Plan Fee
4 euro Pension Authority Fee

Can I do better than this in terms of fees?
 
The AMCs look pretty low to me.
When are the plan fee and Pensions Authority fee charged?
 
In my case I think Irish life had a flat AMC for everything maybe 0.75, then each fund had a variable charge on top. So even cash was costing over 1% a year in charges.

If the charges are only 0.27 and 0.16 then that sounds very good value.
 
ClubMan said:
When are the plan fee and Pensions Authority fee charged?
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They are charged monthly. I assume the low fees are negotiated as a benefit to a larger company plan. A life hack could be to join a large company DC plan with low fees early on in your career and when you have available funds to contribute? Then you might be able to keep a low fee structure for a portion of your pension plan that has the greatest capacity to multiply.

Yes, comparing my partner's DC plan where its 1.05% for similar fund with Irish Life it seems such a good deal but wanted to check.

It makes me think what ways we can make the best use of the low fees. Thinking if we have some larger lumps of cash without a purpose, a good hands-off approach would be to add it as a lump sum contribution to my DC plan. This will be in excess of age-related tax relief but would grow tax-deferred without the complications for managing taxes and deemed disposal paperwork as in a non-pension investment account.

This wouldn't work for everyone, but for us we are within 7-8 of reaching age 50 when we could access some of the retired DC pension pots and expect to be able to live comfortably on not too much more than the 20% income level as a married couple.
 
Apologies, I meant that the 70 plan/4 pension authority fees are annual but broken up and paid monthly! So it seems like a great deal and thinking about padding it where I can.
 
The reason you have low fees is that someone else is paying for the administration costs. With large company plans, those low fees are the life company admin fee. All they do it invest the money. They don't know which contribution comes from which employee, they just get a lump sum each month. Your employer pays the likes of Mercer or Aon to administer the scheme.

If you have your own policy or even a smaller scheme, you don't have those economies of scale and you have to pay the life company to be the administrator of your pension.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Ndiddy said:
Looking at my Irish Life defined contribution plan investment guide charges:
.27% AMC for Developed World Equity Fund
.16% AMC for Annuity Objective Fund (Government and Corporate Bonds)
70 euro Plan Fee
4 euro Pension Authority Fee

Can I do better than this in terms of fees?
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Find out what the TER is. It took me a while but I eventually got the figure from my pension provider.
 
FintanJ said:
Can I ask how you got TER? I was under impression they would never disclose the real cost.
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Yes they do. They don't publish them. Part of the ter in a fund is incorporated in the management charge you are paying, as well as broker commission and costs of administrating your policy.

Whereas, if you have a self administered policy, all fees are separate.

Also, life companies can benefit from economies of scale and will try to negotiate a reduced fee.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
When this work pension plan is retired (lump sum and ARFed), I assume that as individuals we lose out on the low fee structure?
It seems ARF fees hover at 1% or more?

In our case then, it probably make sense to retire the most expensive of our plans first? To leave the other plans to keep growing under the lower fees?

I know that I have seem on AAM that IL funds under perform but for the average person like me, one of the main things I can track and keep down is fees.....
 
Ndiddy said:
When this work pension plan is retired (lump sum and ARFed), I assume that as individuals we lose out on the low fee structure?
It seems ARF fees hover at 1% or more?

In our case then, it probably make sense to retire the most expensive of our plans first? To leave the other plans to keep growing under the lower fees?

I know that I have seem on AAM that IL funds under perform but for the average person like me, one of the main things I can track and keep down is fees.....
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Yes, because you have to pay for it yourself.

The cost of running your pension isn't a low fee structure, somebody else is paying for it! ;)
 
Our current fees (with APT Masterplan) are 0% Load Fee, 0 policy fee so the only fee we pay is the annual management fee (which depends on the fund you pick) varies from 0.2-0.7%. the average is 0.52% and the default fund is 0.64%
 
AJAM said:
Our current fees (with APT Masterplan) are 0% Load Fee, 0 policy fee so the only fee we pay is the annual management fee (which depends on the fund you pick) varies from 0.2-0.7%. the average is 0.52% and the default fund is 0.64%
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Yes but what is TER?
 
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