Best pension option - small company

[solidrockman]

I'm in a small company and we're looking to set up a pension scheme for six people. No-one really knows anything about pensions and it has fallen to me to recommend something.

We've been in touch with a broker but I wasn't too happy with him. He was pushing an Eagle Star group pension plan which seemed rather complicated, and was very vague on the actual charges.

Having done some research here (great site!) and elsewhere I'm now planning to recommend one of the execution-only PRSAs deals on offer from LABrokers. Two questions...

1. Is there anything in particular we should consider because there is a group of us?
2. The group spans in age from mid 30s to mid 50s, this should presumably influence fund selections for each individual?

Any advice greatly appreciated...

 

[ClubMan]

If you want advice then you should be talking to an independent financial intermediary/pension consultant and not a tied agent or the like. Sounds to me like a low charges PRSA (e.g. 0% on each contribution and 1% annual management charge) may be one suitable option. You should get specific advice, shop around and read the many existing threads on low cost PRSAs and other pension types. Regarding the age profile of employess each individual will need to select a fund or funds in which their money is invested that best suits their specific needs. If you know nothing about pensions then you should not be taking on the responsibility of recommnding something!

 

[LDFerguson]

If you go down the route of a group of PRSAs, each individual employee will have a PRSA of their own. However, if you're transacting via a broker, Eagle Star won't offer any advice to you or any of your colleagues as to fund choice, contribution level etc. As Labrokers is an execution-only service, neither will they. If all employees are comfortable signing up without any advice, then Labrokers is indeed the way to go. But if you or any of your colleagues require advice, you'll need to look elsewhere - either online or by paying an advisor a fee.

 

[ClubMan]

By the way - isn't the company already legally obliged to have appointed a nominated PRSA provider? Have they not done this and if not why?

 

[solidrockman]

If you know nothing about pensions then you should not be taking on the responsibility of recommnding something!

True, but it's a case of needs must. I'm learning fast and basically if I don't do the legwork on it then it just won't happen - and I'm the one that wants it most!

By the way - isn't the company already legally obliged to have appointed a nominated PRSA provider? Have they not done this and if not why?

Some time ago the company registered with New Ireland. No one took out a PRSA, mainly because the company is only a few years on the road and wasn't in a position to contribute at the time. Does this registration affect our pension decision now...?

 

[MMilken]

True, but it's a case of needs must. I'm learning fast and basically if I don't do the legwork on it then it just won't happen - and I'm the one that wants it most!

Some time ago the company registered with New Ireland. No one took out a PRSA, mainly because the company is only a few years on the road and wasn't in a position to contribute at the time. Does this registration affect our pension decision now...?

No - it would have no impact on your decision now.

One disadvantage of PRSA from company's point of view is that the employees can take it with them easily - so it is not really much of a "Retention Tool"...but that can be to the employee's advantage!

Also - for owner managers, key employees - the level of contribution that is eligible for tax relief under PRSA may be lower than the owner/key employee might want to put into their pension arrangement.

 

[ClubMan]

One disadvantage of PRSA from company's point of view is that the employees can take it with them easily - so it is not really much of a "Retention Tool"...but that can be to the employee's advantage!

Surely the only retention tool in this context is if the employer is contributing to an occupational pension fund (usually matching the employer's contribution up to some limit) and they cannot keep these contributions until they have 2+ years membership of the scheme?

 

[MMilken]

I would view a pension plan as a retention tool in that if the employee is considering moving and realises "oh crap, they don't have any pension scheme and my current employer has a great pension scheme".

 

[solidrockman]

It's already been agreed that the 2+ year restriction will be waived. The key attractions of the PRSA from everyone's perspective would be simplicity and flexibility.

Another question (which I know has been touched on in other threads) is which PRSA provider might be the best. Both Hibernian and Irish Life offer some discounts on their annual charges depending on the size of the fund. Eagle Star don't, but my impression is that they are the best performers for pensions.

Does anyone have any views on the relative merits of these providers?

 

[ubiquitous]

Eagle Star ... my impression is that they are the best performers for pensions.

Their ads certainly give that impression. Whether or not it is true is another matter. I have my doubts. And anyway, past performance is no guide to future performance.

 

[ClubMan]

I agree about past perforance obviously. For what it's worth I've had a PRSA with ES for a few years now and I do find that they are generally on the ball with their administration particularly compared to other providers that I have dealt with and this is a not insignificant plus in my opinion. And they offer a good range of funds and you can get their offerings with low charges if you shop around (e.g. go through a discount execution only broker rather than direct). However you really need to shop around as widely as possible and get good independent advice to ascertain what is the best option for you and your colleagues.