High Pension Fees?

[franc82]

I have setup a pension via our company. They match up to 3% but I am contributing 5%
I was very surprised when I read my Statement last week and I could not believe the fees that they are charging to maintain my pension.
Here are some interesting figures:
- My monthly contribution is 245 euros and the company is paying 147.5
About the monthly charges:

• Policy fee deduction : 4.16 euro
• Pensions Board Fee Deduction: 0.50 euro
• Pension Administration Fee: 19.68

It is the pension administration fee that completely blew my mind as yearly it is adding to 236 euros which is almost equal to my monthly contribution. When including the policy fee it is costing me almost 300 euros per year to look after my pension.

Are these fees the norm? Where should I complain if the fees are deemed too high?

 

[LDFerguson]

That's a fee of over 6% per contribution. There's better available in the market and there's worse. A lot depends on how many members are in the scheme as a whole.

You'll probably find that there's also an annual fund management fee on your chosen funds; a percentage of the fund value. Ask.

Usually it's the employer who chooses the pension scheme and agrees the terms and conditions. If you're not happy with the charges on yours, it's the employer you'd complain to.

 

[franc82]

@LDFerguson Thanks for your reply. To me more precise, here is a breakdown of fees. 6% seems a lot to me. Is it because I am investing in 3 funds? And in that case, would it be cheaper if I only invest in say, 1 fund?

I contacted my employer but I am still waiting for their answer. I just wasn't expected to be paying that much for my pension given all the competition out there. Because at this rate, I am saving someone else's pension.

 

[Protocol]

100% allocation is great.

FMC of 0.65% sounds like Fund Management charge of 0.65%, which also sounds okay.

What is "Pensions Authority Fee"?

What is Member Charge?

 

[ClubMan]

About the monthly charges:

• Policy fee deduction : 4.16 euro
• Pensions Board Fee Deduction: 0.50 euro
• Pension Administration Fee: 19.68

View attachment 9491

I'm confused - these details don't seem to match up.

 

[GSheehy]

Looks like figures have been mispresented and that the administration fee value is the AMC.

Pension authority fee on all occupational pensions schemes (except when it covered by provider, or maybe employer)

Member charge is probably policy fee.

Probably 150+ members in the scheme and employer is subsidizing cost of administration to the tune of circa €200 per member.

 

[Airgunster]

I think it would be better to ask employer on what to expect and what was agreed between them and Irish Life.

 

[Fortune]

100% allocation is great.

FMC of 0.65% sounds like Fund Management charge of 0.65%, which also sounds okay.

What is "Pensions Authority Fee"?

What is Member Charge?



View attachment 9491

The pension authority charge €6 a year per member to pension schemes. This is the charge being passed on to the member. Of course the pension authority must be flush with cash from all the funds flowing into PRSAs recently where they take 0.05% of AuA annually

 

[LDFerguson]

Is it because I am investing in 3 funds?

I doubt it. You wouldn't usually be charged extra because of the number of funds you're in. Each one would usually be charged as a percentage.

As has been mentioned by others above, there's a difference between what you posted in your first post here and the Irish Life table that you subsequently posted. The figures on the two posts don't match. Before approaching your employer, I'd be 100% clear that you know what exactly you're currently being charged.

 

[franc82]

I am fairly new to investing in pensions in Ireland and this is my first one and it is done via the company I am working with. Attached a screenshot of my statement where you can see the figures that I mentioned in the original post. One thing is sure to me is that those fees are not sustainable at all! It is obvious to me that at this rate I am investing for someone else's pension not mine.

The IrishLife table was sent to me by the pension broker as I am still to hear from it with more information about those charges. The staggering aspect of those charges is that they are taken on a monthly basis and not yearly. Spending more than 10% of my monthly contribution (on Pension Administration Fee, Pensions Board Fee Deduction, Policy Fee Deduction) to maintain my pension seems just crazy and will definitely eat up all my potential gains.

 

[Savvy]

Looks like a pension fund of around €78,720 with a 'pension fee' of 0.3% per annum(applied monthly) on top of whatever the fund itself deducts.
Is this going to the broker?

 

[ClubMan]

Looks like a pension fund of around €78,720 with a 'pension fee' of 0.3% per annum(applied monthly) on top of whatever the fund itself deducts.

Why do you think that it's 0.3% and €78,820 and not some other set of figures that match the c. €19.68 monthly charge? E.g. 0.2% and €118k?

 

[ClubMan]

Any chance that the employer maximum matched contribution is actually 2.5% rather than 3%? That would seem to match the figures if the various charges are deducted from the employer contribution.

For what it's worth, assuming that the fund annual management fee is the 0.65% mentioned earlier, you're still in a better place than if you were contributing to a pension with no employer matching at all.

Still, it would make sense to clarify the nature and details of these charges with your employer or their pension provider in order to understand them fully.

 

[GSheehy]

This is part of the hysteria created on discussion forums where pension holders don't know what they have, struggle to get accurate information from those being paid to service the pension, assume that they are being fleeced because some fool on Reddit misrepresents and leaves out a whole heap of information on the what they themselves being charged and then, to cap it all off, you have moderators who fan the flames by agreeing 'that it's all terrible and the industry is a scam' just to get upvotes from an unknowing audience.

It's someone else's fault that those, people charged with cutting out the absolute BS and misinformation, cannot grasp how the charging structures work in the first place.

And, to cap it all off, that unknowing audience then think they have enough research and knowledge to do an execution only transaction, just because they read it on Reddit.


Gerard

www.prsa.ie

 

[ClubMan]

This is part of the hysteria created on discussion forums where pension holders don't know what they have, struggle to get accurate information from those being paid to service the pension, assume that they are being fleeced because some fool on Reddit misrepresents and leaves out a whole heap of information on the what they themselves being charged and then, to cap it all off, you have moderators who fan the flames by agreeing 'that it's all terrible and the industry is a scam' just to get upvotes from an unknowing audience.

It's someone else's fault that those, people charged with cutting out the absolute BS and misinformation, cannot grasp how the charging structures work in the first place.

And, to cap it all off, that unknowing audience then think they have enough research and knowledge to do an execution only transaction, just because they read it on Reddit.


Gerard

www.prsa.ie

Huh? What hysteria? @franc82 is simply trying to understand the charges on their occupational pension. Seems perfectly reasonable and not at all hysterical or foolish to me.

 

[franc82]

There is no hidden agenda or hysteria from me about my questions please @GSheehy . I am genuinely seeking other people's advice as I feel that the fees that I am being charged for my pension are just too much.

For your information, the current fund value of the pension is 7,333.32 euros. I started investing in the company pension in May 2023. My initial contribution was 147.5 which was the same as the employer then in January I increased mine to 245 euros and the employer is still 147.5.

Given this, I just don't understand the enormous charge that I am paying on a monthly basis. I will appreciate any feedback on this please. Thanks to all of you for your valuable input so far, I really appreciate it.

 

[GSheehy]

My post was a general observation of what's happening on some forums.

You/We do not know that what you have. You've assumed it's a dog and from your original post we had no way of telling.

The contract isn't between employer and Irish Life, someone else is in the middle, an intermediary. The buck stops with them.

The person that's being paid to help you understand what you have here, isn't helping.

You left a lot of information, that you had, out of the original post.

This was posted on Reditt as well. When asked about the number of members in the scheme, no number was given (or even an approximate of no. of employees). Rather than make some sort of effort to answer the question, you chose to go off on a tangent about costs of savings plans (that I assume you tried to buy directly from the providers because you thought that was the cheapest way). It was mentioned again here about the number of employees and has been glossed over. It's important so that we can get a handle on what it might look like.

The structures posted bear no resemblance to each other. It's like they apply to different schemes.

The pension broker is adding to the confusion so it's highly unlikely that anyone here, who has no access to the convoluted pricing of the scheme, can help you either.

Tell the broker that you cannot reconcile the numbers and that you want them to do that for you, based on fund value and/or premiums paid. If they are reluctant to do this, log a complaint. If they cite that there are no disclosure requirements on occupational pension schemes, include the Central Bank in the next reply to them.

This day and age it's not appropriate to hide behind that nonsense. The broker is really the only person who can help you here. You're wasting your time contacting Irish Life or the employer. When you do get to the bottom of it come back here and post your findings. You may be able to make a case for getting the employer to change the scheme or, if the broker acts the maggot, change both broker and provider.

Now that you've disclosed the fund size you'll see how misleading the original figures are on their own by the estimates of fund size that followed.

Best guess now is that you have the policy fee and pension board trappings of an occupational pension scheme. A 5% bid/offer spread or charge on each contribution (did the value change when you changed contribution?) and an AMC of 0.65%. A 5% contribution charge over circa 20 years is an approximate equivalent of an additional AMC of 0.48%pa.