Discount/execution-only pension options

Zenith63

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i think the point is you get a better deal at >500 pm via a broker
Barely. €1k over the 35 year life of the pension based on the figures given here. Yes you get rid of the early encashment penalties, but lets be honest how many people setting up a pension for 20/30/40 years encash them in the first five.
 

gnf_ireland

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Yes you get rid of the early encashment penalties, but lets be honest how many people setting up a pension for 20/30/40 years encash them in the first five.
Yes but you can change providers. I have done it twice so far with my pension. I accept I probably made a mistake initially going with BOI Life, but later moved it to New Ireland who offered the best deal at the time and subsequently moved it to Zurich. As the pension pots grows, I find better deals tend to be available so the flexibility to move is something to keep in mind.

I have two years left until the early encashment penalties expire and will review at that stage what I will do then. I may not switch, but I will look at the best options on the market and how the funds have performed in the previous 5 years, especially against market indexes.

Its likely a point will come, at some stage, where I will consider a self administered pension and a passive investment approach using EFT's - maybe !! Depending on the size of the pension pot !
 

Sarenco

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  • Execution-only discount broker option 1 mentioned by GSheey - €144k
  • Execution-only discount broker option 2 mentioned by GSheey - €108k
There's obviously a big difference between Option 1 and Option 2.

I wonder do any discount brokers have a similar tiered fee arrangement for PRSAs?
 

Sarenco

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Why would you buy option 1 when you have €1,000pm to contribute?
Well, you wouldn't obviously.

Do you offer any similar reduction in your commission for PRSAs with contributions above €500pm? Of where the overall fund size reaches a particular level?
 

GSheehy

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@GSheehy out of curiosity, what would you consider to be a 'good deal' for an Executive Pension and/or PRSA?

I appreciate everyone has different levels of pension pots and contributions, but as a general rule of thumb....
You've appear to have a good relationship with the intermediary you used last time (Post #7).

Non-PRSA products are evolving and becoming more competitive all the time as they don't have the regulatory overhang of additional costs on PRSAs.
 
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GSheehy

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Well, you wouldn't obviously.

Do you offer any similar reduction in your commission for PRSAs with contributions above €500pm? Of where the overall fund size reaches a particular level?
For PRSAs, I don't. That's not to say they're not available, but I can't get a provider to budge on PRSAs.

Personal Pensions (RACs) are the same terms as the above (100% / 0.75% ) for EPPs - without the Pension Authority Fee.
 

SBarrett

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I had a chance to look at the mythical (EPP) pension product pricing structure that's the subject of this post.

It's of paramount importance that all the information is made available so that the folk that read these posts can make an informed decision.

  • The minimum contribution is €30 per month
  • There is a policy fee of €3.50 per month
  • There is a Pension Authority Fee of €8 pa
  • There are reducing early surrender/transfer charges in the first 5 years of 5%, 4%, 3%, 2%, 1%
  • You can buy it with 100% allocation and 0.75% AMC ( on the Matrix Range of Funds) - I doubt too many are 'sold'.
  • The Director of the Company is the Trustee - IMHO the rules on this will change and Directors will have to appoint (and pay for) external Trustees or pay the provider for that service. Or, revert to a PRSA.
You can buy the above without the policy fee and surrender/transfer charges, and with the cost of Trusteeship included, via an execution only/discount broker website on the following terms i) 100% allocation and 1% AMC or ii) 100% allocation and 0.75% AMC if the contribution is €500pm or more.
And don't forget to mention, there's a 10% commission payable of the first year's contribution. And 10% of any subsequent increases.


Steven
www.bluewaterfp.ie
 

GSheehy

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And don't forget to mention, there's a 10% commission payable of the first year's contribution. And 10% of any subsequent increases.


Steven
www.bluewaterfp.ie
On the mythical one, yes.

Not on the execution only/discount broker one. That's the same as the execution only PRSA deal where the broker is paid out of the AMC quoted.
 

Zenith63

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Not sure which pension you’re referring to Steven, but no 10% commission on the one I have?

GSheey could you name the discount broker you are quoting these figures from please, lest this pension you describe becomes the actually mythical pension in this thread?
 

Zenith63

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Why would you buy option 1 when you have €1,000pm to contribute?
As this discussion started in another thread around the difference between broker vs direct (and now execution only) and the effect of small differences in trailing AMCs, I thought it would be a good opportunity to highlight again that 0.25% sounds like a small difference but really matters.
 

Sarenco

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I thought it would be a good opportunity to highlight again that 0.25% sounds like a small difference but really matters.
That's for sure.

But I think you would have to concede that this thread also shows that when it comes to pension products, there is no real advantage in dealing directly with insurers.

Broker/agent commissions are pretty much unavoidable.

:(
 

gnf_ireland

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You've appear to have a good relationship with the intermediary you used last time (Post #7).

Non-PRSA products are evolving and becoming more competitive all the time as they don't have the regulatory overhang of additional costs on PRSAs.
Will still do a competitive benchmark in 2 years time, and see what the story is then. No harm in at least checking how things are going every 5 years :)
 

gnf_ireland

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But I think you would have to concede that this thread also shows that when it comes to pension products, there is no real advantage in dealing directly with insurers.

Broker/agent commissions are pretty much unavoidable.
Maybe, but the key is to shop around and get quotes from a number of people and see what the best available deal is - no difference really to what anyone should do with any financial decision - and then review it periodically to see whether its competitive and makes sense to switch! Same logic should agree for mortgages, pensions, loans, utilities etc in my world

I guess most people assume that industry insiders have access to information the rest of us don't and therefore have much better deals than we do !
 

Zenith63

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That's for sure.

But I think you would have to concede that this thread also shows that when it comes to pension products, there is no real advantage in dealing directly with insurers.

Broker/agent commissions are pretty much unavoidable.

:(
To be honest I think this thread is at about the point things were when I started looking at pensions and was reading online previously - people are talking about products that are supposedly cheaper but are not naming them, so the consumer is no better off. The only product that somebody can actually pick up the phone and call about right now is the one I've named, the others are currently mythical.
 

SBarrett

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Not sure which pension you’re referring to Steven, but no 10% commission on the one I have?

GSheey could you name the discount broker you are quoting these figures from please, lest this pension you describe becomes the actually mythical pension in this thread?
I've looked up the rates that you have on the Zurich Life broker site and there's a 10% commission paid to the direct sales fella who sold you the policy. These guys eat what they kill, so there's no benefit in them setting it up for free.


Steven
www.bluewaterfp.ie
 

SBarrett

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That's for sure.

But I think you would have to concede that this thread also shows that when it comes to pension products, there is no real advantage in dealing directly with insurers.

Broker/agent commissions are pretty much unavoidable.

:(
As I have stated before, the insurance companies get their business through the broker market (whether it's their own direct sales team or through multi agency advisors). At present, they won't undercut that market. And yes, there is no advantage in going direct. The pricing options available are the same.

But commissions are avoidable but it is nigh on impossible to do it yourself. So even if you know what you are doing and don't want any advice, if you want to do it on a commission free basis, you will have to go through an advisor. That advisor is compelled to create a file for you and has to spend time in setting up the policy for you, which there will be a fee for. I have lots of clients who pay me fees and there's no commission taken from their policies.


Steven
www.bluewaterfp.ie
 

Zenith63

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I've looked up the rates that you have on the Zurich Life broker site and there's a 10% commission paid to the direct sales fella who sold you the policy. These guys eat what they kill, so there's no benefit in them setting it up for free.


Steven
www.bluewaterfp.ie
Would love you to explain this further please? There was no mention of 10% anything in discussions I had with Zurich and I can see my full contributions showing up each month. So from a consumer point of view, I am paying 0.75% AMC instead of 1.25% to put say €1000 a month into PRISMA5 or whatever I choose.

Are you saying that out of that 0.75%, a 10% commission is paid to the agent? Or that the money for the 10% comes out of the internal fees within the funds? It would seem that either of these scenarios are irrelevant to me the consumer as it still comes down to 0.75% vs 1.25% of my fund going to the AMC. If you’re saying there is some hidden 10% charge that I’m going to see stripped from my pension at the end of the year, then I’ll be on to Zurich first thing in the morning?
 

SBarrett

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Would love you to explain this further please? There was no mention of 10% anything in discussions I had with Zurich and I can see my full contributions showing up each month. So from a consumer point of view, I am paying 0.75% AMC instead of 1.25% to put say €1000 a month into PRISMA5 or whatever I choose.

Are you saying that out of that 0.75%, a 10% commission is paid to the agent? Or that the money for the 10% comes out of the internal fees within the funds? It would seem that either of these scenarios are irrelevant to me the consumer as it still comes down to 0.75% vs 1.25% of my fund going to the AMC. If you’re saying there is some hidden 10% charge that I’m going to see stripped from my pension at the end of the year, then I’ll be on to Zurich first thing in the morning?
The person who sold you the pension would have received €1,200 in commission for setting up the policy for you. Zurich Life recoup that €1,200 from the 0.75% amc. If there is no commission paid, the 0.75% is lower.

Nothing is stripped from your pension at the year end, fees are deducted on a monthly basis.


Steven
www.bluewaterfp.ie
 
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