Hi, Im looking at starting a pension and have so far spoke with one pension provider, Irish Life who have a contribution fee of 5% & AMC of 1% for a standard PRSA. I've been doing a bit of research on non-standard prsa's with the likes of Davy's and it seems with their non-standard 'execution only' prsa has no contribution fee - 100% allocation , a 0.75% dealing charge plus a 1.75% services charge if I'm correct. I'm guessing they have a non-execution prsa as well but can't find charges for that. Obviously, the charges seem to be less with non-standard prsa's like davys etc.. Does anybody have one of these with Davy or another provider and would they recommend? As there are no cap on charges like with the standard prsa, is there a risk of the provider hiking the charges at any time with non-standard PRSA's? If we go through a economic crash etc.is there is nothing stopping them to increasing their charges to say another 5% or am I missing something? Thanks!
Are non standard PRSA's risky?
- Thread starter SClarke
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LDFerguson
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In theory it's possible but in practice I'd say it's highly unlikely. It's in the legislation that you can transfer from one PRSA to another without being charged at either end. So if a Non-Standard PRSA provider decided to hike up their charges, I'd imagine that they'd suddenly see a lot of their funds migrating over to a cheaper Standard PRSA with one of their competitors.
We had a pretty bad economic crash in 2007 / 2008 and no Non-Standard PRSA provider put up their charges then.
Dave Vanian
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If you don't need financial advice and can choose your product and funds yourself, you can get lower cost PRSAs by going to a discount broker, like one of the ones mentioned . You can up to 100% invested even with Irish Life, i.e. no contribution fee, depending on the size of your contribution.
davyselect
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Hi SClarke,
There is no additional service charge on the Davy PRSA, just the 0.75% annual charge.
The section on the website showing the 1.75% figure is an example of the total charges associated with buying €100k of Irish shares in the PRSA. The 1.75% in this example consists of the the 0.75% annual charge and 1% stamp duty on the purchase of the shares.
Best regards
davyselect
Customer of Davy Select for the last 5 or years. I pay about 1.75% for AMC, FX and Stamp Duty. Quite happy with everything. They are quite easy to deal with. A parent used the service for a last minute AVC recently and it was quite easy to work through all the documentation closing out the account. If you're interested in holding shares/funds directly, I would recommend.
Thanks for all the advice. @LDFerguson good to know you can transfer to another prsa without having to worry about any charges, I didn't realise that was actually part of the legislation, thought it was dependent on whatever contract you have with your pension provider. @Itchy thanks for the advice re Davy, just curious how often are you actually actively managing your funds? I only have a very basic knowledge of shares at present but I'm up for learning. I'm curious is there an option to be a sort of 'lazy but safe investor' with the davy pension - i.e. invest in an ETF - S&P 500 and just leave your money in there long-term. Based on my research on the return from standard prsa's like irish life, zurich etc. it seems like this approach could provide better returns, especially considering there isn't the 5% contribution fee and a lower management fee? Are you investing in any US shares as part of your PRSA by the way - are there extra fees for those do you know? Thanks again.
Too much!
Why would you use your pension for learning? How long will it take you to learn how to beat the market, how much growth & capital will have lost before you crack it? Time in the market always.
S&P5 ETF is defiantly lazy, not so sure about safe though
Could you share some of your research? You're already on the right track in terms of recognising that fees will be a serious drag on your returns, surely dabbling with your pension money will obliterate that. For example, if you are interested in the market, I think you would be better coming up with a blend of sectoral funds that matches your risk appetite. If you are doing that then I would recommend @LDFerguson (though I just checked the website and it seems a bit bare?). when I was dealing with him, the fees for Zurich were 100% allocation and 1%AMC. I didn't follow through with him in the end (wifes circumstances changed) but everything was grand. There are others on this website too, if you search you will find them easily.
Yes and no. Am I holding US shares directly, God no. The fees are extortionate, €50 round trip for non-UK or Ire shares. I hold US shares through UK investment trusts mostly. Davy are good for what they are. You get some research, you get a kick back on some AMCs for some of their funds, perfectly functional.
If you want to learn to trade/invest do your dabbling in a DeGiro/Interactive Brokers account. If you want to learn and invest at the same time check out MyWallSt HQ for your tech trade or someone like Rory Gillen/Gillenmarkets if you're more into the value side.
Your pension is your pension, it has a purpose.
Thanks for all the feedback @Itchy, I guess I was trying to find out more info around the Davy PRSA to figure out if it could be a viable option for someone totally new to investing like me - if i could invest long-term in an ETF like s&p 500 and just leave it in there. It sounds like from what you're saying that may not be the best call to make. I know the tax with ETF'S or any tax on any investments in Ireland on withdrawal is a killer so that's what I had in the back of my mind as well - use it as a good opp to make some decent returns tax free and relatively safely. My understanding of funds like s&p 500 was that they are pretty safe and reliable as they track the market but perhaps they are subject to more risk than I thought?
I've also found out about LA Brokers - Zurich PRSA recently - 100% contribution & 1% AMC, I think that may be the one you're referring to above? It looks like you can just select Zurich funds through this, I just have to find out if there are any catches with doing a Zurich prsa through them, if not they could be the best option for me. Cheers re your resource suggestions, I hope to start an account with degiro soon to familiarize myself and learn more about this fun new world!
I've also found out about LA Brokers - Zurich PRSA recently - 100% contribution & 1% AMC, I think that may be the one you're referring to above? It looks like you can just select Zurich funds through this, I just have to find out if there are any catches with doing a Zurich prsa through them, if not they could be the best option for me. Cheers re your resource suggestions, I hope to start an account with degiro soon to familiarize myself and learn more about this fun new world!