Can fees on old Irish Life plans be as low as claimed?

R

RobFer

Registered User
Messages
139
Hi all,
I have a relative with an old Irish Life plan (S3/S4 Balanced). They pay 250 every month since 1989. I am trying to get my head around the tax and fee structure. I have spoken to Irish Life and they say there is no Exit Tax applicable as the plan redates 2000. They claimed that the only fee is a 6 Euro fee and the only tax is a 1% gov levy on contributions. I asked how much are they as a percentage but the representative claimed that he didn't know what the fees would work out as a percentage but it was only six Euro. The plan is now worth about 100,000 and it seems implausible that fees and taxation would be so slow, especially in a plan that predated the drive for lower fees. Do such plans have hidden fund management charges? I feel I should keep ringing asking as many reps as possible to I get more detail.
 
My guess would be that there were high fees on that contract in the past but they have recouped the massive commission paid out originally as well as their profit on it and that is it. Hard to know with these really old contracts. There is tax deducted within the fund so the value of the fund is the amount that you will get paid out. If they did pay in €93,000 as Gerard calculated, the return is 0.46% per annum.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
It's quiet possible that there was a nil-allocation period of 12 - 18 months, where nothing at all was invested. That there was a reduced (not 100%) allocation for every other contribution after that. That there was a 5% bid/offer spread. The €6 fee makes no sense as it would have been converted from £4.73 and those fees were usually rounded. I'm still surprised by the value v's total contributions though. It may be €250 pm now but maybe it was indexed from a much lower level in 1989. There would also have been life cover on this type of plan and there would have been a cost for that, through the years, until such time as the value exceeded the sum insured. Or, maybe that sum insured is still there and it would be an additional payment to the cash-in value, on death. I doubt that the Annual Management Charge was more than 0.75%.

Gerard

www.bond.ie
 
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In a similar enough situation, fund taken out mid- late 90s and have been assured of no tax on exit. Levy as above. No information to be found online on these funds. Mine's global equity and returning closer to 3%, though it's pretty aggressive and has dipped below the value of contributions in the past.
 
Thanks a lot for the info. I called again and this time they mentioned a 0.25% management charge and the monthly 6 something Euro charge. Even that is still very low.
I rounded the contributions. I think the exact figure is 276.84 and actually the sum now is 112k. My figure was from an old leaflet.
The key question now is whether the fund sum should be moved to an investment trust which might have better growth prospects.
 
With any of these big companies, you'll get a much more reliable answer if you ask them to put it in writing to you. E-mail them and ask them to detail all the charges ... policy fee, allocation rate, bid/offer spread, initial and accumulation units, annual management charge, penalties for cashing in, bonuses for leaving it alone, risk benefits, cost of risk benefits, all other charges.
 
If you are looking after the finances for a relative, can we assume they are getting on in life? Is there any need for them to be paying €250 a month into a policy? Maybe they can cash in the plan and put it in the post office? Or is there something they would like to buy? I find it an awful pity when someone saves money for 32 years and has nothing to spend it on at the end, they just bring it to the grave with them. They would have been better off spending the money or giving it away.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
They are
Yup. 66 YO and 73. 73 YO still does part-time work. They own their home, work premises and have an investment property. They inherited various UK shares which seem to have done more from them than Irish Life. I encourage them to splash out and spend their money but travel is the only thing that they would be bothered with and that is not happening now and they have enough money to do that post covid independent of the Irish Life fund. Their only worry is if they require expensive medical treatment/ nursing homes. You are right saving 270 a month seems pointless at this stage. Not sure if trust make sense or just a saving account. I think they maxed out on state saving bonds.
 
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