Setting up an ARF

F

freewheeler

Registered User
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16
Need advice re transfer of Personal Pension Bond with open market option to ARF. I can have choice of execution only broker,
or one of the fund administrators.
Anybody done this via execution only broker. If so, any guide on fees charged. Pros & Cons of either choice.
Tks in advance
 
freewheeler said:
Need advice re transfer of Personal Pension Bond with open market option to ARF. I can have choice of execution only broker,
or one of the fund administrators.
Click to expand...

Just to clarify - your options are: -

  1. Stay with the same provider where your pension fund currently is and start your ARF with them. Whoever is listed as the agent / broker on the Personal Pension will get paid commission for your ARF even if you don't have any dealings with them this time around. If you are dealing directly with the pension company, they may assign a direct sales person to you who will get the commission.
  2. Go to a Financial Broker who will give you advice and help you choose your most suitable ARF provider, funds etc. They will also advise you on whether or not the ARF is the most suitable product for you at this time. Other options to be considered could be deferring drawing down your pension right now or an annuity. If it's a Buy-Out Bond / Personal Retirement Bond there may be several ways of calculating your tax-free lump sum and a broker offering advice will go through the different calculations with you.
  3. Go to a Financial Broker who offers Execution Only services. For Execution Only, you must first decide yourself if the ARF is the most suitable product and if so which ARF product provider is most suitable for you and which fund(s) are most suitable for you. If you go for Execution Only, you'll get no advice from the broker about these choices, but the charges will be lower than if the broker is giving you advice.
Regards,

Liam
www.FergA.com
 
Hello Liam, Tks for advice. Its a Personal Pension Bond with open market option.
Just to clarify, now age 74 yrs. So have to take ARF with tax free €200k
Have you any ballpark amount €, for execution only broker to set up ARF.
Is there any listing in Dublin of those brokers dealing with ARF set up.
Regards
Frank
 
freewheeler said:
So have to take ARF with tax free €200k
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Sorry - this sentence has me a bit confused. Are you saying that your tax-free lump sum amount will be €200,000 and you will invest the rest in an ARF? On a Personal Pension you can withdraw 25% of the fund as a tax-free lump sum, so that would indicate that your total Personal Pension fund is around €800,000, you'll take €200,000 out as a tax-free lump sum and will put €600,000 into the ARF. Is that correct?
 
Hi Frank,
I think the question to ask is what is your desired outcome for the ARF? Do you have particular assets in mind e.g. direct property or shares (noting arm's length investment) or is it the fees that you are more concerned about? From my experience of execution only one example would be €3K plus VAT set up plus minimum ongoing management charges of at least .5% per annum of assets under management (subject to minima) plus fees/ ongoing costs of underlying assets held - so can be more expensive.
Do you have an investment background that your wish is to go the self directed route. You have also mentioned that you are now 74 but in 10 years time you will be 84 and will you still have the capacity for the research and management of the scheme? There are merits to having a good adviser with a strong understanding of market offerings who can help you remove the emotive side to investing.
Niamh
 
Liam. Amount to invest in ARF would be about €700k .Total PP fund excess ,,,,€900k
So, my question is what sort of fees are normal for execution only broker to set up ARF,
as I understand that there are substantial commissions allowed by large fund suppliers.
Tks again
 

Hi Frank. For that size of an ARF we'd haggle with the ARF providers to see about getting them to reduce their standard charges a bit. But as an example, if you were looking for index-tracking funds, we could set up an ARF that size with 100% investment (no set-up charge), no bid/offer spread, no policy fee and 0.35% annual charge. That annual charge includes the cost of the funds and the ARF product itself. To get that level of charges, you'd be locking in with that ARF provider for 5 years and would pay to move your fund away from them in the first 5 years. Our commission for that size of ARF would be 0.25% once-off and no ongoing commission, on the assumption that this is an execution-only transaction with no ongoing service.
 
LDFerguson said:
Our commission for that size of ARF would be 0.25% once-off and no ongoing commission, on the assumption that this is an execution-only transaction with no ongoing service
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That's €2,250 - there must be a lot of work in setting up an AIF, and work that you can't do yourself presumably ?
Also, annual fee of 3k - what exactly to you get for that, a broker account ?

The more I read about my future pension options, the more I see my pension as a helpless carcass being picked away at constantly by vultures all trying to get their flesh. There really must be an easier and cheaper way for people to fund themselves later in life
 
Rasputin said:
That's €2,250 - there must be a lot of work in setting up an AIF, and work that you can't do yourself presumably ?
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It's €1,750. It's certainly possible to do the work yourself - it involves setting up the ARF at the receiving end and liaising with the administrators of the transferring pension scheme. But the important point is that if you choose to DIY, the ARF will be set up on your chosen ARF provider's standard terms, which usually include up to 4% commission for whatever direct sales agent the ARF provider hands your enquiry to. You don't get "nil commission" financial products by approaching a product provider directly.

Rasputin said:
Also, annual fee of 3k - what exactly to you get for that, a broker account ?
Click to expand...

The example I gave of 0.35% p.a. or €2,450 is a combined fee for both the ARF provider and the fund manager for an index-tracking fund. As it's an execution-only transaction, broker gets no ongoing commission or fee. Other options are available, including self-directed functionality so if you want a trading account that's possible.
 
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@freewheeler

The best advice I can give you on execution only (and more imortantly, the majority of readers that don't have large pension funds) is that you can buy an ARF 'off the shelf' / online execution only ARF with a maximum annual management charge of 0.75% (with no entry/exit charges or additional broker fee). Minimum is circa €20,000.

There is no panel of execution only intermediaries. What you need to do is decide on what product provider you want to invest with, do some research on the ARF funds available from that provider and then send an email to 2/3 intermediaries saying 'I want to invest €700K in an ARF with XYZ Company in their ABC Fund/s. I want the transaction to be execution only and I want to know what all the charges are (AMC, Ongoing, Exit etc.), and if there is an additional intermediary fee for executing the transaction.'?

So, use the structure above as a starting point and gauge the pricing you receive in the email responses from that. Exit charges are important because you know if you don't have them you can move if a lower cost product comes to your attention in next 4/5 years, without penalty.

Gerard

www.prsa.ie
 
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