AVCs Employer or PRSA?

[interested21]

I make AVCs each money up to my tax free-allowance, and also make additional AVCs at the end of the year on bonuses I've gotten along the way. This adds up to a decent value of AVCs. I've always done this through the Irish Life occupational pension that my employer provides, without giving it much thought. Today I was reading elsewhere about the execution-only Davy Select PRSA that would allow me to put my AVCs into an All-World Equities ETF of my choice.

I find pension fees a bit of a minefield to get to the bottom of, but people on these forums that people generally say Irish Life have high fees. I'm 100% in their Global Equity Fund, which according to my investment brochure has an Overall Fee of 0.10%pa, which seems quite low. Meanwhile the Davy equivalent lists a fee of 0.50%. I'm also wary of the tracking error mentioned elsewhere on this forum in relation to Irish Life index funds.

My questions are:

1. Am I missing something in the fees, which make my Irish Life pension worse value than it seems?
2. If the Davy product is lower fees, would it be a good idea to open one up and pay my AVCs into there instead of Irish Life?

 

[Dave Vanian]

I find pension fees a bit of a minefield to get to the bottom of, but people on these forums that people generally say Irish Life have high fees. I'm 100% in their Global Equity Fund, which according to my investment brochure has an Overall Fee of 0.10%pa, which seems quite low. Meanwhile the Davy equivalent lists a fee of 0.50%. I'm also wary of the tracking error mentioned elsewhere on this forum in relation to Irish Life index funds.

If the annual charge for your fund is 0.1%, I'm going to guess that you're in a pension scheme of a big employer with hundreds if not thousands of employees, as that's very low. As such it's a lower charge than anything you'd pay if you did your own thing, but it would certainly be worth your while getting more information from whoever the pension scheme contact is...

• Please confirm the Ongoing Charges Figure (OCF) of this fund. (This attempts to show up any additional charges not included in the 0.1%).
• Please confirm if I am paying any other charges within this pension scheme, e.g. administration or trustee charges. (Quite probably not, as your employer may well be paying for the administration of the scheme separately.)
• Please send me a fund fact-sheet on the Global Equity Fund, showing past performance of the fund at regular intervals since launch.

Using the third item above you should be able to compare the Irish Life fund performance against a global equity index to check for yourself how it has performed against the index.

If the responses you get to all three queries above are favourable I'd be inclined to stay where you are as you won't get anywhere near 0.1% on your own.

If you decide to do your AVCs separately, remember that the 0.5% charge for a self-directed AVC PRSA is the charge for having the AVC PRSA vehicle. If you then go into an ETF, the ETF will also have its own annual charge. Example, the Vanguard global equity ETF has an annual charge of 0.18%. Total annual charge for that in an AVC PRSA would therefore be 0.68%.