Pension charges - What is a good deal

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NewEdition

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I am looking at setting up a pension and have met a broker.
The charges are:

1% of value taken each year
3% of contribution taken at time of making the contribution

Is this reasonable?

The broker is a friend of a friend and seems like a nice guy so am happy putting business his way, just want to be sure I am not getting ripped off
 
No, this is yet another example of the massively excessive pension charges in Ireland.

It is possible to get:

1% AMC
0% ongoing contribution charges.
 
Is this a PRSA? Is the broker tied or is he independent? Is it an Irish Life product by any chance? Those charges are not low cost. There are cheaper and as mentioned above, you should be able to get 0% contribution charges.
 
Sunny said:
Is this a PRSA? Is the broker tied or is he independent? Is it an Irish Life product by any chance? Those charges are not low cost. There are cheaper and as mentioned above, you should be able to get 0% contribution charges.
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PRSA is 5% of contributions.
Tied broker I believe, he cannot reccomend other providers.. he was straight with me on that.
So give me a couple of example providers where it is 0%?
I imagine if I called them, I would be put in touch with a rep who would pester me constantly.. thats why I asked this guy.
 
NewEdition said:
PRSA is 5% of contributions.
Tied broker I believe, he cannot reccomend other providers.. he was straight with me on that.
So give me a couple of example providers where it is 0%?
I imagine if I called them, I would be put in touch with a rep who would pester me constantly.. thats why I asked this guy.
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You will need to shop around. I know you used to be able to access some Zurich and Irish Life PRSA's through Labrokers with 0% contribution charge. Not sure if that is still the case.
 
From that labrokers link, it says they take 0.25% of the 1% AMC.
So even if you know exactly what you want, the cheapest you can get still gives 0.25% of your pension fund forever to someone for simply passing on your application form and doing nothing else after that?
 
Qwerty22 said:
From that labrokers link, it says they take 0.25% of the 1% AMC.
So even if you know exactly what you want, the cheapest you can get still gives 0.25% of your pension fund forever to someone for simply passing on your application form and doing nothing else after that?
Click to expand...

That is how they get paid. They get nothing upfront. If you pay €10,000 in the first year, they will get paid €25. It will take a number of years for them to make money on the policy.



Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Qwerty22 said:
From that labrokers link, it says they take 0.25% of the 1% AMC.
So even if you know exactly what you want, the cheapest you can get still gives 0.25% of your pension fund forever to someone for simply passing on your application form and doing nothing else after that?
Click to expand...

Yep. Welcome to the great pensions rip off. Not like Zurich will apply an AMC of 0.75 if you go directly to them either rather than having them pay a commission. Everyone wants a piece of the pie.
 
NewEdition said:
I am looking at setting up a pension and have met a broker.
The charges are:

1% of value taken each year
3% of contribution taken at time of making the contribution

Is this reasonable?

The broker is a friend of a friend and seems like a nice guy so am happy putting business his way, just want to be sure I am not getting ripped off
Click to expand...

How do you want to pay the advisor? If it's by way of commission, that is a reasonable rate as the maximum deduction of contributions is 5%. The 1% AMC is as laid out in legislation. There may be better options with a personal pension plan.

If you would prefer to pay him by fee, you should have 100% of your money invested. He probably won't be able to charge you a fee if he's a tied agent though.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
That is how they get paid. They get nothing upfront. If you pay €10,000 in the first year, they will get paid €25. It will take a number of years for them to make money on the policy.
Steven
www.bluewaterfp.ie
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I am sure they probably do. Depending on the volume of the business, there are probably other rebates included. Not condemning them but if Zurich can afford to pay 0.25% of the AMC to LA Brokers then they should offer the AMC of 0.75% to direct customers. Otherwise what exactly is the direct customers 0.25% paying for apart from extra profit?
 
Sunny said:
I am sure they probably do. Depending on the volume of the business, there are probably other rebates included. Not condemning them but if Zurich can afford to pay 0.25% of the AMC to LA Brokers then they should offer the AMC of 0.75% to direct customers. Otherwise what exactly is the direct customers 0.25% paying for apart from extra profit?
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I use the 0.75% contract for my clients.

But as has been discussed on other threads, insurance companies don't sell directly to the public, they use the broker market. Even if you walked in the door of a life office, you would talk to a tied agent of their direct sales team who get paid on what they sell. They won't offer the 0.75% contract as there's no commission payable under the structure.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
The lowest cost pension contracts on the market at the moment have a base management fee of 0.50% (0.45 for Standard Life MyFolio Market and Aviva L&G). These have no deduction from your contribution (100% allocation) and pay no commission to the advisor. The Standard Life contract has early encashment penalties for the first 5 years (if you switch away). As there is no commission you would have to pay an advisor to set up the contract for you, but this should not cost more than €700, which should then lead to a significant long term saving. Davy Select has a base management fee of 0.40%, but you then have to invest your funds. If you invest in direct equities there is no additional management fee, but if you invest in funds the additional fee will be between 0.06% and 1%+ depending on the fund chosen.
 
@David Quinn

I thought Davy charged a platform fee of 75bps for their execution-only PRSA - has this changed recently?

Also, when you say that Standard Life and Aviva have a "base management fee" of 50bps for specific products are you referring to their AMC or something else? Are there any additional policy charges applicable to those products?

Many thanks in advance.
 
@Sarenco

The original poster didn't necessarily mention it had to be a PRSA so I'm using the Personal Pension pricing structures. The Davy Select PRSA has a 1% Annual Management Fee, with 0.50% going to the broker as 'commission / fees'. This 'commission' can always be offset against advisor fees or rebated depending on the deal struck, but good to know its there!!

The 0.50% base fee quoted for Standard Life for example have no other policy fees or charges. The underlying funds may have additional TER which is hard to quantify exactly within a pension contract as they are not required to disclose it. This would apply to any insured pension contract though. Their Vanguard offering will have a lower TER than most though.

Dave
 
Thanks Dave.

I would have thought that one of the advantages of the Davy PRSA is that it can be accessed without going through a broker/adviser (with all due respect to brokers/advisers). Their charging structure is admirably transparent but I think it's still too expensive to be particularly attractive.

Friends First have a product with an AMC of 0.40%. That carries a policy fee of €120pa but it seems like a reasonable deal for larger pension pots.
 
Do you have a link to that Friends First pension product with the AMC of 0.4% and the €120 application fee? (I can't see anything with charges like that mentioned on their site.)
Thanks.
 
David Quinn said:
The lowest cost pension contracts on the market at the moment have a base management fee of 0.50% (0.45 for Standard Life MyFolio Market and Aviva L&G). These have no deduction from your contribution (100% allocation) and pay no commission to the advisor. The Standard Life contract has early encashment penalties for the first 5 years (if you switch away). As there is no commission you would have to pay an advisor to set up the contract for you, but this should not cost more than €700, which should then lead to a significant long term saving. Davy Select has a base management fee of 0.40%, but you then have to invest your funds. If you invest in direct equities there is no additional management fee, but if you invest in funds the additional fee will be between 0.06% and 1%+ depending on the fund chosen.
Click to expand...


What I see on the SL website is much higher AMC:

[broken link removed]

0.95% AMC on the MyFolio Market funds.
 
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