SSIA into PRSA Irish Life, consensus fund?

[Fanny]

How to build up a significant PRSA pension/SSIA into PRSA?

Hello,
I'm very confused about my pensions and I have to admit I used to go the easy way, choosing the provider my companies suggested. Only now that I'm thinking of putting some of my SSIA into a pension I have started to take a closer look at my pensions. Sorry for my ignorance, but I thought that it doesn't make a huge difference where you open your PRSA but I have learnt alot through your pages on PRSA charges.
I have one frozen occupational pension scheme with Irish Life, Consensus Fund, it has been frozen for 2 yrs now, and I don't get the annual reports on it anymore, in fact last year I was sent a wrong report the one of a colleague by Mercer who is supposed to look after the scheme!
There are about 5000 EUR in it but it couldn't be taken over by the new employer (even though it sounded like it would be easy to take it over when I started it!) Reluctantly I started a PRSA instead, also with Irish Life, same consensus fund, but my new company is not very concerned about pensions, they have agreed to match my contributions with 10% BUT only if I chose Irish Life, I agreed anyway.
As I am a low earner and they charged some 5% so far for the first 6 months (not sure if that's the entry fee or what) the fund has just about made enough profit to match the charges, it only paid the bank so far. And I end up paying management fees for the occupational pension scheme too which they have claimed "would not be worth to put into the PRSA" even though it is the same fund (but different management fee).
I am very unhappy with the service and wonder if my pensions will ever go anywhere like that. I do not even know what happens if i have to take on a job in France in a few years. How many frozen pensions (that I will be charged for) will I end up with at the end of my life?
I want to put some of my SSIA into a pension to get any sort of a lump sum worth mentioning together to start off from a better basis but I don't know if it is a good idea to stay with Irish Life. Is it worth transfering the PRSA to another provider or what is the best option?
Thanks for any advice.
Fanny

 

[Fanny]

too many small funds, employer not helpful

The payroll dept has chosen my PRSA pension provider and if I change my PRSA to another provider I will lose the employers contribution which is (only) 20EUR a month, 10% of my contribution.
Unfortunately in the tourism industry where I work we change jobs often and also take on part time jobs or 3/4 every now and then. There is no one who is experienced with pensions at our company despite it being a large US multinational > 250 employees. I do not even receive my pension contributions paid in regularly and on time.
I am not able to save up any serious amount in a private pension or company, and all the portability of pension schemes has proven wrong for me so far. I have to open up different schemes and am not getting anywhere. Anyone with advice how people who work in tourism, or call-centres can help themselves to provide for a pension under these circumstances?

Regards,

Fanny

 

[ClubMan]

Re: How to build up a significant PRSA pension/SSIA into PRSA?

but I thought that it doesn't make a huge difference where you open your PRSA but I have learnt alot through your pages on PRSA charges.

You probably now know that while Standard PRSA charges are capped at 1% annual management fee and 5% of each contribution it is possible to get lower charges on PRSAs or personal pension plans (aka Retirement Annuity Contracts/RACs) usually for a fixed fee (often c. €100) from a good discount broker (multi-agency intermediary or authorised advisor)?

I have one frozen occupational pension scheme with Irish Life, Consensus Fund, it has been frozen for 2 yrs now, and I don't get the annual reports on it anymore

Yeah - this is a pain. There is no obligation for the underwriter/scheme to send out annual statements on paid up occupational schemes and you have to track them yourself by checking online or manually requesting valuations/statements as and when needed.

in fact last year I was sent a wrong report the one of a colleague by Mercer who is supposed to look after the scheme!

That's poor form. Did you complain?

There are about 5000 EUR in it but it couldn't be taken over by the new employer (even though it sounded like it would be easy to take it over when I started it!)

Other than administrative hassle there is nothing necessarily wrong with having more than one pension plan with at most one accepting contributions at any one time. Assuming charges are competive and fund selection/allocation is appropriate (e.g. usually high equity/risk/reward for a young pension saver) ther may even be a benefit in diversifying across different providers.

Reluctantly I started a PRSA instead

Why reluctantly?

also with Irish Life, same consensus fund, but my new company is not very concerned about pensions, they have agreed to match my contributions with 10% BUT only if I chose Irish Life, I agreed anyway.

10%! That seems very generous! Do you mean that if you are in your 30s then you can contribute 10% of your gross and the company will match it thereby maximising your pension tax/PRSI relief (20%)?! Or do you mean that the employer will contribute an additional 10% of whatever you contribute?

As I am a low earner and they charged some 5% so far for the first 6 months (not sure if that's the entry fee or what) the fund has just about made enough profit to match the charges, it only paid the bank so far.

As above - Standard PRSA charges are capped at 1% annual management fee and 5% on each contribution. If you are paying more than this then it may be a Non-Standard PRSA (no charge caps) and you should make sure that if you are paying higher than normal charges that there is a benefit from doing so.

In general it makes sense to avail of employer matching contributions by contributing at least as much as needed to do this.

And I end up paying management fees for the occupational pension scheme too which they have claimed "would not be worth to put into the PRSA" even though it is the same fund (but different management fee).

There are certain barriers to transferring occupational funds into PRSAs which can make it impossible in some cases. Note that you are not necessarily paying more by having your pension savings split into a paid-up occupational fund and a PRSA. You would be paying the annual management fee anyway. If the annual management fee is in or around the same on both funds (c. 1%) then you are not losing out on this front other than if there was another suitable fund with a lower annual charge.

I am very unhappy with the service and wonder if my pensions will ever go anywhere like that.

Why?

I do not even know what happens if i have to take on a job in France in a few years. How many frozen pensions (that I will be charged for) will I end up with at the end of my life?

There are several existing threads on this sort of issue (what happens my pension when I move country) which might be worth checking.

I want to put some of my SSIA into a pension to get any sort of a lump sum worth mentioning together to start off from a better basis but I don't know if it is a good idea to stay with Irish Life. Is it worth transfering the PRSA to another provider or what is the best option?

It really depends on charges, fund selection and whether or not you will lost the ability to avail of matching employer contributions.

If in doubt get independent, professional advice tuned to your specific needs.

 

[ClubMan]

The payroll dept has chosen my PRSA pension provider and if I change my PRSA to another provider I will lose the employers contribution which is (only) 20EUR a month, 10% of my contribution.

OK - 10% of your contribution and not 10% of gross. That answers one of my questions above!

Can you clarify what type of PRSA it is (Standard or Non-Standard) and what the charges (annual mangement fee and per contribution charge) are?

 

[Fanny]

Hi Clubman,

I have a Standard PRSA!
There is no information what the charges are for
Statement says:
Amout contributed to provide retirement benefits: 884 EUR
Less charges: 44 EUR, amount to invest: 840 EUR

Exempt Consensus 885 EUR Total value of assets
(and that is more or less exactly what I paid in. That is very bad, my fund just made 44 EUR for the bank)

Contribution was made only for four instead of six months ca 220 EUR/month and at very irregular times even though payroll claims they have forwarded on contributions just after payday every last day of month.
I get commission payments in November, and my contribution to PRSA is supposed to be a percentage of my salary but the amount contributed to my PRSA was even lower than in lean months and I ended up paying alot of tax in November at 20% whereas my PRSA credits had been underused in previous month due to low income!

This PRSA is quite new but I have had so much hassle in the first six months that I'm thinking of swapping the provider even though that means losing the 20EUR employer contribution. Or am I being a bit impatient.

Fanny

OK - 10% of your contribution and not 10% of gross. That answers one of my questions above!

Can you clarify what type of PRSA it is (Standard or Non-Standard) and what the charges (annual mangement fee and per contribution charge) are?

 

[ClubMan]

I have a Standard PRSA!
There is no information what the charges are for

The statement man not itemise them but (a) if it's a Standard PRSA then they are at most 1%/5% and (b) the original pension agreement terms & conditions should clarify precisely what they are if not 1%/5%.

Statement says:
Amout contributed to provide retirement benefits: 884 EUR
Less charges: 44 EUR, amount to invest: 840 EUR

€44[.20] is basically 5% of €884 so it sounds like your per contribution charge is the max.

Exempt Consensus 885 EUR Total value of assets
(and that is more or less exactly what I paid in. That is very bad, my fund just made 44 EUR for the bank)

Over what period of time? Judging pension performance over a few months or even years is not really meaningfule given (a) the total investment term involved and (b) the fact that high equity content investments will exhibit (possibly significant) volatility over time as they (hopefully) track an overall upward trend.

Contribution was made only for four instead of six months ca 220 EUR/month and at very irregular times even though payroll claims they have forwarded on contributions just after payday every last day of month.

Employers are obliged to remit PRSA contributions deducted through payroll within 21 (?) days of deduction. If there is a problem with this contact your payroll department or the Pensions Board if you get no joy.

I get commission payments in November, and my contribution to PRSA is supposed to be a percentage of my salary but the amount contributed to my PRSA was even lower than in lean months and I ended up paying alot of tax in November at 20% whereas my PRSA credits had been underused in previous month due to low income!

You can always top up your pension contributions up to your age related tax relief limits. If you do this before October 31st in any tax year you can claim tax relief against the previous year's earnings. You should make sure that you are maximising your employer contribution (i.e. the 10% of your contribution - so make sure that you maximise your contribution to the level that suits you).

This PRSA is quite new but I have had so much hassle in the first six months that I'm thinking of swapping the provider even though that means losing the 20EUR employer contribution. Or am I being a bit impatient.

I think you are. The charges could be better but at 1%/5% (presumably) they are not excessive and you need to take a very long term view with pensions and now really worry about the performance over a few months/years. Of course if you can get a better deal on charges and retain the benefit of your employer contribution all the better.

Hope this helps.

 

[bleary]

I was looking at taking out this PRSA myself (irishlife consensus)
I have been quoted 0% contributions and 1% annual fee-

Id be interested to know what the main problems you see with it are?
Your problems with the PRSA provider are the 5% on contributions eating up the growths or that the payments dont seem to be made into the fund ?
Have you contacted Irish life -any joy?
If the PRSA has made 5% in 6 months that doesnt seem to be a bad return on the fund in regards to performance

 

[ClubMan]

I was looking at taking out this PRSA myself (irishlife consensus)
I have been quoted 0% contributions and 1% annual fee-

That's a pretty competitive charging structure.

Id be interested to know what the main problems you see with it are?

With what?

Your problems with the PRSA provider are the 5% on contributions eating up the growths or that the payments dont seem to be made into the fund ?

I'm not clear on what Fanny's problems are either but it seems to be (a) the lack of short term performance (which is not an issue in my opinion as explained above) and (b) the possibility that contributions are not being remitted or credited in a timely fashion (most likely a matter for payroll rather than the underwriter if this is the case).

Have you contacted Irish life -any joy?

In relation to what specifically? Just to clarify I don't see where there are any obvious grounds for complaints to the underwriter or legitimate complaint about the operation of the scheme from what has been posted. Or maybe you simply mean to clarify the issue about the timing of remittances/credits?

If the PRSA has made 5% in 6 months that doesnt seem to be a bad return on the fund in regards to performance

Arguably it hasn't made anything (other than the 5% charge back). Total contributed €884, current value €885. Overall return 0.11%. But this is not a problem in my opinion.

 

[Fanny]

Arguably it hasn't made anything (other than the 5% charge back). Total contributed €884, current value €885. Overall return 0.11%. But this is not a problem in my opinion.

>> OK point taken, maybe I think too short term, the problem seems to be that most people taking out these policies in my company know nothing about it, and I am trying to understand how this can grow into something considerable over time. What exactly means 5% ON CONTRIBUTIONS SO AND WHAT HAPPENS IF THERE IS NO GROWTH IN STOCKS OR IF THEY GO DOWN. wON'T i STILL FEED THE BANK? The main problem is that my contributions arrive irregularly and I cannot understand why they are higher in months where I got a bad pay than in good months, there is no transparency. Payroll pretends they can't do much about it and sends me to Irish Life and Irish Life says payroll has to decide. Trying to get a grip of this I find it very hard to make any decisions. E.G. if I want to put my SSIA into the PRSA what would happen, how much should I put in, what about the charges, is it a good idea?
As I mentioned I already have a frozen company scheme with Irish Life, where I have received bad communication so far.
I simply want a clear picture before I decide to put EUR7.000 or 10.000 or even more into my PRSA, and I want the best PRSA.

Fanny
...just trying to get more expertise on this

 

[ClubMan]

the problem seems to be that most people taking out these policies in my company know nothing about it, and I am trying to understand how this can grow into something considerable over time.

Because, in general, equities tend to perform most or all other asset classes over the long term.

What exactly means 5% ON CONTRIBUTIONS SO AND WHAT HAPPENS IF THERE IS NO GROWTH IN STOCKS OR IF THEY GO DOWN. wON'T i STILL FEED THE BANK?

5% of each contribution is taken in charges by the pension provider so 95% gets invested on your behalf. After that 1% of the gross value of the fund is taken in charges and this charge is reflected in the daily unit price of the funds in which you invest. While I too like to keep charges low I don't think it's unreasonable for a pension provider to charge something as a quid pro quo for the work that they do. Personally I'd prefer lower than 1% annual management charge and no per contribution charge but it's not always possible. Also - since the annual management charge is levied on the full value of your fund it's in the pension provider's interest to maximise returns since that maximises their remuneration. There is no conspiracy here - you pay for a service and, all going well, over the long term your fund increases (hopefully significantly) in value.

The main problem is that my contributions arrive irregularly and I cannot understand why they are higher in months where I got a bad pay than in good months, there is no transparency.

Perhaps it's simply because your pension contributions are specified as a percentage of your earnings so if these fluctuate then your pension contribitions (including employer top-up) will also fluctuate? If you are not sure then ask your employer.

Payroll pretends they can't do much about it and sends me to Irish Life and Irish Life says payroll has to decide. Trying to get a grip of this I find it very hard to make any decisions. E.G. if I want to put my SSIA into the PRSA what would happen, how much should I put in, what about the charges, is it a good idea?

I can't understand why your employer can't answer a straight question about contributions as outlined in my previous point? Maybe you are not making the questions posed clear to them? There are several other threads about SSIA to PRSA transfers which might be worth reading. Your employer would not need to be involved in such a transfer. If you feel that your pension is underfunded and you are not planning to buy a house or whatever then such a transfer could be a good idea.

As I mentioned I already have a frozen company scheme with Irish Life, where I have received bad communication so far.

You haven't received annual statements but that is normal as I pointed out. If you need a valuation or statement then just write to them and ask. If you are unclear about anything (e.g. charges, performance, fund selection, fund or provider transfer options etc.) then ask.

No offence but there is no point in ranting aimlessly about this. I and others have provided some good information and advice but it's up to you to use this and not simply dismiss things as some sort of conspiracy on the part of your employer and/or pension provider. Understand the issues, phrase your questions carefully, put them in writing ideally, present them to the relevant parties and keep a record of all communications. If in doubt get independent, professional advice but you are getting pretty good information here even if I do say so myself.

 

[Fanny]

>> Hello Clubman,

thanks for your advice I do take it serious, I am NOT ranting aimlessly.

>> see below. I understand all this but it does not make sense if my contributions are LOW when I earn much, and HIGH when I earn little. I have put this question to payroll with no clear answer, and I have more issues wit IL than not sending me statements, e.g. not coming back with answers, sending someone elses statements, not sorting out regular payment. I also spend all my lunch breaks trying to get answers from either payroll or Irish life. I have got more from You, thanks for thst, I have learnt alot. I get no company time to sort any of these questions.
But I am much clearer now thanks to you.

The main problem is that my contributions arrive irregularly and I cannot understand why they are higher in months where I got a bad pay than in good months, there is no transparency. Perhaps it's simply because your pension contributions are specified as a percentage of your earnings so if these fluctuate then your pension contribitions (including employer top-up) will also fluctuate? If you are not sure then ask your employer.

Fanny

 

[ClubMan]

it does not make sense if my contributions are LOW when I earn much, and HIGH when I earn little.

It does if your pension contributions are calculated as a percentage of your weekly/monthly salary payments. Ask payroll on what basis pension contributions are calculated/deducted. If, although your weekly/monthly salary fluctuates, you have a good idea of how much you would earn in a year then maybe switching to a fixed pro-rata pension contribution (i.e. annual contribution divided by 52 weeks or 12 months) might be a better idea. What does your contract of employment say about pension deductions from salary?

I get no company time to sort any of these questions.

You should get some for this in certain circumstances - see the Pensions Board website.

The main problem is that my contributions arrive irregularly and I cannot understand why they are higher in months where I got a bad pay than in good months, there is no transparency.

OK - that's different and if you said that before then I missed it.

 

[CCOVICH]

Fanny-have a read of some of the info on the Pensions Board site, specifically here.

 

[Fanny]

Thanks for the link. I'm reading all about it at the moment.
I read the AIB little guide on pensions, PRSA too which is quite good.
There is talk about backdating / forward dating of pension tax entitlements. As I work part time I and put average 200EUR approx a month into my PRSA I overpay it. In the months when I get my commission I am taxed at 20% (in some months no tax is deducted due to low income) but payroll does not seem to send out a higher percentage against my PRSA in the months when I get my commissions and I end up paying alot of tax, 450 EUR last November. They actually sent a lower amount 186 EUR in the month when I received my commission even though the salary was more than twice than in the lean months. I turned to payroll to ask about this but nobody could answer and they sent me to IL and so on. That was two weeks ago. One of the problems is there is a point of contact missing in our payroll dept and the deduction process seems to be automatised and no one can explain the rules. Maybe due to my part time status and irregular income there is a problem with calculations. I do not think my full tax benefits are used up despite overpaying my PRSA at the moment, so do I have to claim tax back from the tax office for the last year or should PRSA balance this automatically?
I have another appointment with IL advisor, but I think this probably a payroll issue.
2. To top up my PRSA it would be a good idea to roll over the SSIA but I want to sort these issues first and get more confidence in the product and understand all about how it works before I do that. So would they take 5% off my SSIA money when I roll it over?
Is there any way to get around that, e.g. opening a new PRSA for that?
Thanks for all your great advice, very helpful when there are few points of contact/experts here.

Fanny

Fanny-have a read of some of the info on the Pensions Board site, specifically here.

 

[ClubMan]

I think that you're making things unnecessarily complicated here.

Your employer must be able to explain the deductions mechanism whether it is automated or manual. You need to get this clear. You then need to clarify if you are contributing the amount you want to the PRSA. If not then you could always top this up on a standalone basis and claim any tax and PRSI back manually. The drawback of this is that you don't get any employer 10% top-up on those contributions. Any contributions made through payroll should be done before tax and PRSI/health levy deductions are made thus granting you relief at source. Double check this with your employer. If necessary post your payslip and/or P60 figures here so that people can comment. The SSIA to PRSA roll-over issue is completely separate from any employer/payroll issues. I don't see the need to open another PRSA unless you can get better charges (e.g. avoid the 5% contribution charge). Even then I'm not sure that you can contribute to more than one at a time? Feel free to haggle with the IL rep to get the 5% charge, if applicable, waived for the SSIA to PRSA transfer.

 

[Fanny]

Thanks Clubman. I don't think I am making things complicated. I cannot get that relevant information from payroll, nobody is responsible to deal with this issue, I had to approach a manager now but the answer I got was that they will invite the Irish Life guy again in the near future to explain about these things. I know he will tell me it is a payroll issue and so forth. Have you ever worked in a call-centre, Clubman? There is nobody in this company to sit down with and go through it AND I know the SSIA is a different issue, but before I will put in alot of money into my SSIA I want to see this account heading into the right direction. Maybe Quinn Life Pension would be an alternative?
Fanny

 

[ClubMan]

I cannot get that relevant information from payroll, nobody is responsible to deal with this issue

This doesn't make sense at all. Surely your employer knows how their payroll system works?

I had to approach a manager now but the answer I got was that they will invite the Irish Life guy again in the near future to explain about these things. I know he will tell me it is a payroll issue and so forth.

Yes - and he'd be correct. All he can tell you is what happens to your contributions once their remitted, what charges apply etc. It's not his responsibility to explain your employer's payroll system to you.

Have you ever worked in a call-centre, Clubman?

No - why? What has this non sequitur got to do with this thread? If you are being sarcastic then please say so so that I can stop wasting my time trying to help you with your queries and concentrate on others that are more grateful for assistance.

There is nobody in this company to sit down with and go through it

Then you need to insist that your employer identifies somebody who can. It is unacceptable for them not to.

AND I know the SSIA is a different issue, but before I will put in alot of money into my SSIA I want to see this account heading into the right direction.

What do you mean by right direction? If you mean performance wise then we have dealt with this above and explained how (a) the fact that your PRSA has at least earned your 5% charges back so far isn't actually bad and (b) that judging the performance of a pension over 6 months simply doesn't make sense. This is the sort of thing that I mean by making things complicated. Earlier you seemed to accept the explanation that I and others gave in this context but you are raising it again and mixing it in with the whole payroll, alleged pension provider problems, allegedly poor performance, and SSIA to PRSA transfer issues which are all separate issues that need separate attention.

Maybe Quinn Life Pension would be an alternative?

Why? Their charges may be lower but then you may miss out on your employer's contribution.

 

[bleary]

clubman -having worked in a call centre
I would pick up what fanny would mean is high staff turnover and little care taken for staff etc -Computer says NO in attitude of the payroll staff.

the problem seems to be with the payroll staff not being very in charge of their roles rather than Irish life causing problems.
Saying that though there might be a case for Fanny changing PRSAs if she can get a low contribution charge which negates the employers contribution of 10% -
when the contribution is paid directly say by direct debit- how does the tax relief work

 

[ClubMan]

clubman -having worked in a call centre
I would pick up what fanny would mean is high staff turnover and little care taken for staff etc -Computer says NO in attitude of the payroll staff.

Thanks. I assumed that it was sarcasm on the basis that I thought that I had read somewhere that Fanny worked in a hotel or in the hospitality industry. My apologies if I was on the wrong track...

the problem seems to be with the payroll staff not being very in charge of their roles rather than Irish life causing problems.

Agreed. The issue of being sent the wrong statement is pertinent but perhaps was simple a once off (admittedly gross) mistake. I've been mistakenly sent the trading statements of other individuals by a well known Dublin stockbroker who I dealt with so and my boss's contract of employment by my employer when we both joined a year ago do such accidents do happen!

Saying that though there might be a case for Fanny changing PRSAs if she can get a low contribution charge which negates the employers contribution of 10% -

Good point.

when the contribution is paid directly say by direct debit- how does the tax relief work

You inform Revenue - e.g. write to your regional tax office sending them a copy of the PRSA1 certificate and any other pertinent details - and they will refund any outstanding tax relief and/or adjust tax credits to provide the relief into the future. For PRSI/health levy relief you claim this separately and only in arrears I think. See here.

 

[Fanny]

Thanks Bleary,
what you assume is 100% correct, I was starting to get a bit frustrated but at no time was I trying to WASTE anyone's time. Thanks for some helpful answers so far Clubman. Don't mind me, if I haven't got the same expertise and explain some things with too many words. Yes I work in the tourism industry, and this is a call-centre and what Bleary assumes is absolutely correct. I am looking to invest my SSIA into a pension, but thought there might be a better option than putting it into my current PRSA. I might also come across complicated because English is not my first language. Again, thanks for advice and I hope there will be no more confusion.
Fanny

clubman -having worked in a call centre
I would pick up what fanny would mean is high staff turnover and little care taken for staff etc -Computer says NO in attitude of the payroll staff.

the problem seems to be with the payroll staff not being very in charge of their roles rather than Irish life causing problems.
Saying that though there might be a case for Fanny changing PRSAs if she can get a low contribution charge which negates the employers contribution of 10% -
when the contribution is paid directly say by direct debit- how does the tax relief work