Best Buy AVC Charges fees please advise

[november16]

Hello could I please get some information . Virtually clueless re AVC and terminology re AVC.
and
AVC prsa
I am designated as an uncivil servant but dont work in civil service am on secondment to an NGO charity for last 25 years.
Pre 95 civil service miniscule pension on clerical wage.
Approximately Half of Salary of 21,000 unpensioned due to a strange practice of civil service leaving someone '"act up" in secondment for 25 years and then not paying superannuation on higher duties.

Will have 28 yrs served in 2025 re civil/public servant.
Could someone please explain
Annual Management Fee re AVC 1%

What are the other fees charges re taking out A.V.C
Could you please explain re differing allocation rates (what does allocation rate refer to
Fee of 5% mentioned on each contribution is that weekly if avc paid weekly from salary?

What does this mean? re 5% on each contribution re AVC.
If doing 3,000 lump sum re AVC before October what would the fees be or can that be answered am I asking questions the correct way to elicit an answer
Kind Regards
November

 

[GSheehy]

1% AMC = 1% of the value of your AVC every year for its duration. Usually deducted by the AVC provider monthly so, 0.0833% pm

5% Contribution Charge = 5% of each and every contribution you make so, €100pm = €95pm allocated to your plan.

Are you being sold an AVC or a PRSA AVC?

Gerard

www.prsa.ie

 

[november16]

Thanks very much. What is the difference between AVC and PRSA AVC

I am just looking at options of 3,000/5000 p.a. if paid into an AVC

re contribution charge eg 100 pm 95 is allocated to the plan do eg Aviva get the other 5
what approx is the breakdown of fees
fee for the broker financial adviser
fee for the insurance company?
what are the fees paid to the broker/advisor
Kind regards November16

 

[GSheehy]

They both serve the same function but there's no disclosure (of costs/charges) requirememt on an AVC as it comes under the rules of occupational pension schemes.

There is a disclosure requirement on a PRSA AVC. Different rules.

The 5% pays the financial adviser for the advice he/she gives you.

The 1% AMC is to pay the product provider/insurance company for administering the AVC and managing your money.


Gerard

www.prsa.ie

 

[RetirementPlan]

Have you looked at 'execution only' brokers who will set up an AVC of your choice, but won't be involved in providing any advice? 5% is a big slice off your investment, so you'd want to be sure you are getting value for this.

 

[Dave Vanian]

Have you looked at 'execution only' brokers who will set up an AVC of your choice, but won't be involved in providing any advice? 5% is a big slice off your investment, so you'd want to be sure you are getting value for this.

Execution-only services, as you say, come with no advice. So before you go to one, you need to know what you are doing. For an AVC or an AVC PRSA, that would include you already knowing the following: -

• Whether or not an AVC represents good value for you when viewed alongside the main superannuation benefits.
• That the superannuation benefits plus the proposed AVCs won't exceed maximum benefits relative to salary at retirement.
• Which product company to choose.
• Which fund(s) would be best suited to your requirements from the choice available.

If you don't already know the answers to the above four points, going to an execution-only broker could result in you choosing something that's inappropriate for your needs - a potentially costly mistake.

The OP says that the AVC is likely to be €3,000 to €5,000, so the 5% charge would be €150 to €250. That's the cost of paying someone to advise and answer these and any other queries.

The OP described themselves as...

Virtually clueless re AVC and terminology re AVC.

So although I'm a fan of execution-only services for people who don't need any advice, I don't think that's the case here.

 

[GSheehy]

• Whether or not an AVC represents good value for you when viewed alongside the main superannuation benefits.
• That the superannuation benefits plus the proposed AVCs won't exceed maximum benefits relative to salary at retirement.
• Which product company to choose.
• Which fund(s) would be best suited to your requirements from the choice available.

In defence of execution only clients:

• They have a fair idea what they want and whether it's good value or not. Someone else has tried to sell them an AVC or they have one already and it's the charging structure they don't like.
• At inception, pension providers run max funding quotes on AVCs (and increases) based on salary/service/contribution/current AVCs/retained benefits
• Fair enough on the company but the products are very limited for Public Servants
• A good online risk profiler will determine that for you. 99% of funds I see on PRSA AVCs are multi asset/mixed funds of varying risk ratings.

But, I get your point in this case and they're definitely not for the clueless.


Gerard

www.prsa.ie