Are Small Self Administered Pension Funds still viable?

[Brendan Burgess]

I was asked about this recently and said I would check it out.

The person has about €400k in an ordinary pension fund and a financial advisor suggested an SSAP and investing in property. I didn't like the sound of that.

This post suggests that they are no longer viable:

Independent Trustee Company (ITC) winding up Small Self-Administered Schemes (SSAS)

This has been coming for a while but is a pain. Just received the email below. Main problem is that I need to think about this all over again. Will talk to Financial Adviser but I liked the way I had things set up in terms of: 1. Large contributions from company (I am proprietary director) 2...

www.askaboutmoney.com

I had one years ago and the advantage was much lower costs.

But I assume that if they are still available, then the cost advantage is gone.

Someone with a fund of €400k would be better off investing in a low-cost fund from one of the fund managers.

Brendan

 

[Steven Barrett]

No they are not because they are one person company pensions. Self directed PRSAs are the alternative and are not subject to IORPS II legislation, so there can be an asset concentration and borrowing within the fund too.

 

[LDFerguson]

Self-administered Occupational Pension Schemes (a.k.a. Executive Pensions) are no longer available and the last of them will probably be wound up no later than April 2026. Self-administered PRSAs, Buy-Out Bonds, ARFs are all still available.

The main reasons I find people want self-administered pensions these days are any combination of (a) wanting to buy property - still plenty of people out there who want that despite concentration risk or (b) wanting to invest in ETFs or shares of their own choosing - more specialised ones than simple global index-trackers. We have some clients investing in physical gold, private equity etc.

If someone wants a simple low-cost index-tracking equity fund, a fund manager is likely to be lower cost than a self-administered plan for most.

Regards,

Liam
www.FergA.com

 

[Brendan Burgess]

Thanks lads

So what are the typical charges on self-directed PRSAs?

Brendan

 

[LDFerguson]

Thanks lads

So what are the typical charges on self-directed PRSAs?

Brendan

Varies by amount of fund but for someone who wants to invest only in listed shares or ETFs, 1% per year of the assets, to include the PRSA structure and trading platform.

 

[Steven Barrett]

Thanks lads

So what are the typical charges on self-directed PRSAs?

Brendan

I used ITC and their charges are tiered. They start at 3% and go down to 1% for amounts over €200,000. That is for their product with Conexim where you can trade in ETFs/ funds.

Yes, 3% is incredibly high. ITC are in effect telling you to use a life company at the lower level.