Executive Pension vs Master Trust vs PRSA

O

oilmoney

New Member
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Hi,
I have an executive Pension with New Ireland where the AMC is 1.25%, 100% allocation. I have the option of opening either an executive master trust pension or a PRSA, both also with new Ireland at 1% AMC, 100% allocation. This seems like a no-brainer to make a switch given the difference 0.25% makes over say 30 years until I might hopefully able to retire.
However I'm not sure which is the better option to switch to, some commentary on here seems to suggest that there may be limits re-imposed on max contributions to PRSA at some point, however I guess this is crystal ball gazing really to try predict the future. Are there other strong reasons to pick one or the other type?
 
IMHO the full extent of the changes in pricing on both 'new' products won't be known until the middle of the year. But, you could open a new one now and then change again if something better comes to the market.

It might be worth your while to get a maximum funding quote for yourself to get an idea on what level of scope you have under on an Executive/Master Trust. You'll have an idea then of whether the limits are going to limit what you want to do.

It's also worth remembering that (and this is fund specific) a 1% AMC on a Master Trust or PRSA does not mean that, when you take other ongoing costs or CIVs into account, that the equivalent TER is the same. There are some third party costs that can't be passed on to the buyer of a PRSA. So, the equivalent TER for a PRSA is less expensive to you than that of a Master Trust.

This last point is my current understanding as I haven't seen (or heard) of any changes in this regard of late. It certainly was the case for old type Executive Pensions.

Gerard

www.prsa.ie
 
Master Trusts have an advantage over PRSAs in one area - choice at retirement. A Master Trust can use a calculation of the retirement lump sum that involves your salary and service. In some circumstances the retirement lump sum can be 1.5 years' salary. If, for example, you retired on a salary of €100,000 and your fund was €150,000 you could withdraw the whole fund as a tax-free lump sum, which is tax efficient. This won't work so neatly for everyone. A PRSA can only calculate the retirement lump sum as 25% of the fund. A Master Trust can also calculate the lump sum as 25% of the fund, if that's better for the customer.
 
Thanks for the replies. So basically the PRSA will likely have lower costs but the master trust will offer greater flexibility around withdrawals on retirement. Presumably though if you expect to have a fund value of at least 800k then the main driver for the master trust option isnt really there anymore then?
Are there any additional complexities around transferring the funds out of either type to a new type of pension at a later date if required for some reason?
 
oilmoney said:
Thanks for the replies. So basically the PRSA will likely have lower costs but the master trust will offer greater flexibility around withdrawals on retirement.
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What sort of flexibility?
In particular, what sort of flexibility that cannot be achieved or at least approximated by having a PRSA split into separate policies that can be "retired" independently?
 
The flexibility was the ability to withdraw 1.5 times salary and not be limited to 25%. Looks like PRSA is the best option for me so as lower fees over the lifetime is a definite benefit, particularly when compared to a potential difference on withdrawal which may or may not still be relevant in 30 years time. Thanks for the input everyone
ClubMan said:
Yes, bit I'm asking about the flexibility issue specifically.
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