Have to choose between 2 funds

[Merlin]

Hi there,
Hoping to get more good advice from this great site!
I'm eligible to join my company's pension scheme. Have to choose a % of contributions to be invested in Irish Life consensus Managed fund or Irish Life Secure performance fund.
Before you ask I have read through the explanation of both funds on the web but am still clueless.
I'm also thinking of transferring the bond from my last pension scheme to the new one although it was pointed out that that might not be a good idea seeing that the market is not great at the moment. Any thoughts ?
Thanks M.

 

[ClubMan]

Have to choose a % of contributions to be invested in Irish Life consensus Managed fund or Irish Life Secure performance fund.

Are those the only two funds on offer? Doesn't seem like a great choice. If it is then if you have more than a few years to go to retirement then the former sounds like it's higher risk/reward and maybe a better option.

Before you ask I have read through the explanation of both funds on the web but am still clueless.

What specific issues are you clueless on? Have you looked at what the risk/reward profile and asset mix of each is?

I'm also thinking of transferring the bond from my last pension scheme to the new one although it was pointed out that that might not be a good idea seeing that the market is not great at the moment. Any thoughts ?

Do you mean a pension retirement/buy out bond or a previous occupational fund which is still in the former employer's scheme? It may or may not be a good idea on other fronts - e.g. how do the charges and fund options available there and in the new occupational scheme compare? Remember that while consolidating multiple pensions into one place may slightly reduce the burden of administering and tracking them there are other factors to consider before deciding that this is a good thing and appropriate for your specific circumstances.

 

[Merlin]

Hi Clubman,
Thanks for the reply.
The company scheme I contributed to until last year has ceased to exist (company went bust) so they put it into a bond.

Re. the 2 funds (yes these are the only two options) I read the spiel on the Irish Life website and I am no clearer what would be the better option for me. THe consensus fund replicates the avg asset allocation of the Irish fund management industry whereas the secured performance fund assets are invested in line with Irish Life's current view of the future market. The ladder has a managment charge of 1% whereas the other only charges 0.4% (obviously because it's not directly managed). So the ladder is probably higher risk I would imagine ?
M.

 

[ClubMan]

Hi Clubman,
Thanks for the reply.
The company scheme I contributed to until last year has ceased to exist (company went bust) so they put it into a bond.

Odd - I didn't think that the company going bust should have affected the scheme. But maybe it was a case of the company/directors being trustees and since these roles were going to go unfilled in the future then they needed to wind the scheme up or something? Anyway...

Who is the bond with? What charges apply? What fund options are there? You need to look at these and compare them to the new occupational fund in order to decide whether merging them or keeping them separate is the best option. In general terms if the fund selection was wider and the chargers lower on the buy out bond then I would be inclined to keep it separate.

Re. the 2 funds (yes these are the only two options) I read the spiel on the Irish Life website and I am no clearer what would be the better option for me.

How long have you got to go until retirement? Unless you are nearing retirement then you should at least consider going with whichever is higher risk/reward, has the higher equity content and the prospects of better long term returns. Of course charges are also a factor. According to [broken link removed] the consensus fund is at the lower end of the medium risk/reward scale and the secure performance fund is low risk/reward. This is not a great selection for somebody with a while to go to retirement but given a straight choice between the two and a while to go to retirement I personally would go for the farmer rather than the ladder (sorry - the former rather than the latter) on the basis that it is slightly higher risk/reward and has lower charges. Are you SURE that there are no other funds on offer? Even on a "special request" basis?

 

[Merlin]

Thanks a mill clubman.
I'll ask again but I don't think there is more on offer.

You're right about the trustee scenario - that's why it was cancelled. The bond is with New Ireland Assurance. They seem to have quite a large number of funds. Management charges are between 0.75% and 1%.
I have about 25 to 30 years to go till I get to go to the green field.

M

 

[ClubMan]

The bond is with New Ireland Assurance. They seem to have quite a large number of funds. Management charges are between 0.75% and 1%.

On the face of things this would make me personally inclined to keep it separate.

I have about 25 to 30 years to go till I get to go to the green field.

In which case it is quite likely that a high risk/reward/equity content pension funds might be suitable to your needs. Unfortunately the current scheme may not be offering this.

By the way - is your employer matching contributions to some level at all? If not then it may be that you would be better off taking out a low charges PRSA with a wider range of fund options. This may also be the case if you do want to avail of employer contributions and they don't offer an AVC option in which case you may be able to put additional voluntary contributions into a separate PRSA.

If in doubt get professional advice. I'm not a professional financial advisor and these are simply my personal opinions.

 

[Merlin]

Thanks Clubman - your advice is still much appreciated. They do match up to 5% AVC's.

I have a chat with the guy from Assurance Ireland and see what he has to offer

 

[ClubMan]

They do match up to 5% AVC's.

Just to clarify - you presumably mean that they match the employee contribution up to 5% of gross income. AVCs are a different matter - e.g. anything that the employee chooses to contribute over and above the 5% in this case.

I have a chat with the guy from Assurance Ireland and see what he has to offer

Who are Assurance Ireland? Bear in mind that not all financial intermediaries are independent.

 

[Merlin]

New Ireland Assurance I'm trying to do 5 things at the same time and it's not working.

Yes they match up to 5% and I can pay up to 20% AVC's

M.

 

[Dave Vanian]

Irish Life Secured Performance Fund is lower risk / lower potential return than Consensus, so if you have 25 to 30 years I'd go with Consensus unless you are very risk-averse yourself.

 

[ClubMan]

In case of any confusion that is what I was saying above too. And the charges on the consensus fund seem to be lower than on the secure fund. However even the consensus fund seems pretty low risk/reward for somebody with up to 30 years to retirement. I would certainly try asking if there was any possibility of being able to choose a higher risk/reward fund.