Advice on Pension ARF and Savings

Slim

Registered User
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2,677
Hi. I've been looking around the forum and the advice on investing and savings, so I felt that to ask advice I would post a money makeover.
Age: 60
Spouse’s/Partner's age: 57

Annual gross income from employment or profession: Both retired: €36.5k DB pensions
Annual gross income of spouse: €18.5k
Self employment(self only): €50-70k gross

Monthly take-home pay c.€4k pensions plus net of gross above

Type of employment: e.g. retired and self employed

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Rough estimate of value of home €350k
Amount outstanding on your mortgage: nil
What interest rate are you paying?

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? N/A

Savings and investments: €260K in various low int. bank & credit union accounts: €130k in PRSA AVC to be invested in ARF

Do you have a pension scheme? Spouse does, see above. I will open one to accommodate some of above self employed income

Do you own any investment or other property? Share in parent's home may generate €35k in next couple of years

Ages of children: All adult and left home

Life insurance: €200k if either croaks in next 5 yrs.


What specific question do you have or what issues are of concern to you?
Our cash savings plus spouse's AVC amount to approx €€390k. It was set up with Zurich. This needs to be (a) invested in ARF and (b) the balance better invested to retain purchasing power. In the next few days, we need to decide on ARF options for spouse's PRSA. Suggestions from Financial advisor are: Prisma 3 or Irish Life Retirement Investment Plan(?). These have been recommended as we are risk averse and have been bitten by shares and rental property investments in the past 15-20 years. Our profile, per Irish Life website, is Conservative Investor, and I tend to agree with that. We are very fortunate in so many ways, but I want to set things up for the next phase of our lives.
Questions: Is Prisma 3P a good investment for the spouse's ARF? What about the Irish Life product? I can't seem to find any info about fees/management charges.
Is Prisma 5 a good, adventurous, investment for my own new PRSA? I am willing to take a little more risk on this investment only as the amount will be modest enough.
What other options are recommended for spoyse ARF or my PRSA?
How should we invest the remaining €200k or so?

Thanks in advance. Slim

Thanks for any advice?
 
It's important to look across all your accounts when setting your desired asset allocation, rather than looking at any particular account in isolation.

Say you land on a balanced allocation of (roughly) 50% in equities and 50% in fixed income, you could hold all your after-tax savings in State savings products and all your pre-tax savings (ARF and PRSA) in a global equity fund.
 
Are you both retired? Doesn't seem clear to me. Both you and spouse seem to have incomes outside of pension, ie 18.5k spouse and 50-70k self? Then 36.5k pension for spouse also? Maybe I'm reading it wrong...
 
Are you both retired? Doesn't seem clear to me. Both you and spouse seem to have incomes outside of pension, ie 18.5k spouse and 50-70k self? Then 36.5k pension for spouse also? Maybe I'm reading it wrong...
Both retired. Pensions 36.5 + 18.5. Additional self employed income (me) 50-70k.

I am interested in views on the funds offered for ARF and or PRSA. Thanks.
 
What about the Irish Life product? I can't seem to find any info about fees/management charges.

Like all of the big pension companies, Irish Life offer a huge range of charging options and whoever is selling it to you chooses one. The charges should be explained to you. If they haven't, ask the salesperson: -

  • What's the allocation rate? This is the amount being invested at the outset.
  • Are there early exit charges in the first 5 years?
  • What's the annual charge for the chosen funds?
  • How much initial commission is the salesperson going to get? This is a once-off payment for setting the plan up.
  • How much (if any) trail commission is the salesperson going to get? This is an ongoing payment and they must be able to illustrate what ongoing service they will provide for it.
 
Prisma 5 is a good fund and heavily tilted towards equity being a Risk 5 fund, but as per the current scenario it is better to keep the money in cash and keep investing in or making transfers on a regular basis. In terms of diversification also , it makes sense that you always have a mix of few funds or add Gold/ Debt funds or invest in Mixed asset funds. For a layman even if you want to see the performance of funds that can be visited on http://funds.irishtimes.com/.

And as rightly pointed by @LDFerguson always make sure about the above charges. Those should also be mentioned in your Reason why/ Statement of suitability statement once you proceed with any of the product.

Regards,
Swayam M
0852772331
 
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