Standard Life Alternative to Self Admin Pensions/ Good Stock Mkt Investment Vehicle

Firstly not an employee or anything to do with Standard Life, nor a broker etc. etc.

They have set up a product range called Synergy which allows you to self direct a pension scheme without the hassle of setting up a formal Small Self Admin Pension scheme (also know as SART, retirement trust). Such vehicles were for the 'big boys' with hundreds of thousands to play with - needed that scale to get over set up costs.

Why it interests me, being a pleb, is that it seems to allow for playing the stockmarket through your pension fund - calling it "Stocktrade". This gives the advantage of being 47%/48% "up" verses a normal direct investment in shares since you save income tax on the way in. Now fair enough the money is locked into your pension fund but if you anticipate having to sell your share portfolio to feed yourself then it probably wasnt the place for you in the first instance.

From what I can gather the min pension investment is €175 p.m., Stnd Life use a British based stockbroker and the charge for execution only is €30 per trade subject to cap of €200 (I think its a rate of 0.75%, which means you'd be over €4k of a trade before above €30). I think the €30 is reasonable though, if memory serves me right the Tribune was quoting a €50 min charge as among its best buys.

Anyone any detailed knowledge of this or am I fundamentally missing something. It looks like something I might go for. I'll add in the warning that your pension is not something to goof around with on the stock market so have a professionally managed fund as well which is your "real" pension. But if you'd like to mess around with shares anyway then why not put yourself 47%/48% ahead of the game?

Re: Standard Life Alternative to Self Admin Pensions/ Good Stock Mkt Investment Vehic

Betsy Og said:

But if you'd like to mess around with shares anyway then why not put yourself 47%/48% ahead of the game?

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Bear in mind that if the contributions are standalone/off-payroll and not via payroll where (assuming Class A PRSI) 4% PRSI and 2% health levy relief (along with tax relief) is granted at source then you may actually "only" qualify for tax and 2% health levy relief as per this thread - i.e. 44% "ahead of the game".

The form for getting the refund is on this link [broken link removed] and is called CGPRSI1. It specifically refers to PRSI refunds. Theres a no. for queries on 1890 20 30 70.

How it works is that the pension contribution comes off your gross income, so bearing in mind the Class A (most employed persons) PRSI ceiling ('06 €46,600, '05 €44,180) you might only be getting the 2% back. i.e. if you earned €50k then you havent paid 4% PRSI on the last €5,820 of earnings (using 2005 limit) so then refund you would get on a pension contribution of €5,820 would be the 2% (which is fair enough, you cant expect a "refund" for what you havent already paid). However any pension contribution in excess of €5,820 (for 2005, based on 50k earnings) would get you the 4% back.

Since theres no celing on self employed (Class S) PRSI then you'd be getting the 5% (3% PRSI +2% levy) back on all contributions.

Yes - but read the thread above to see how myself and CapitalCCC got on and seemingly only got 2% health levy but not also 4% PRSI back. At the moment it looks like off-payroll/standalone pension contributions (since 1st January 2003) only receive 2% health levy relief while those made via payroll receive 2% health levy and 4% PRSI relief at source. Tax relief is the same in both cases. Seems like a bit of an anomaly and potentially discriminatory for some odd reason. I have written to Revenue in Limerick asking for clarification about my refunds in 2005 and explanation of the rules that apply.

Clubman,

Can you see if my edited post below explains it. I was editing my initial reply at the time you posted.

Betsy

That is completely different to how it works when it is taken from payroll.

If I earn €100k I still get 4% PRSI relief on every contribution when it is done through payroll (until I reach the ceiling for PRSI)...why is it not the same for person that puts in lump-sum at end of year?

Re: Standard Life Alternative to Self Admin Pensions/ Good Stock Mkt Investment Vehic

Betsy Og said:

Clubman,

Can you see if my edited post below explains it. I was editing my initial reply at the time you posted.

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Hmmm... good point. I wonder if this is relevant to my own experience. However CapitalCCC's point in the other thread about the relevant SI seemingly allowing only health levy and not also PRSI relief for off-payroll contributions is also interesting... Sorry for taking the thread slightly off topic. Perhaps these comments need to be merged with the other one?

Hi Both

No - Betsy is correct, it is that limit (Club I meant that only health levy 2%, according to the SI, relief until get the net salary down below the 4% cut-off).

But that is an anomaly - we see guys with €500k salary getting the 4% relief until they hit the PRSI ceiling when contributions done through payroll - why the BLATANT DISCRIMINATION against people that do not contribute through payroll?

Betsy Og,

In comparison with what else is on the market, in this category, at the moment, I think that it is well wort exploring this avenue.

It might wake a few others up and improve their offerings and I know that other Pension Providers have this type of product at an advanced stage of development.

Can anyone tell me what are the charges associated with Standard Life Self admin pensions, for example shares execution only ?

I think a fund management charge of 1% p.a. of the value of any assets applies - so if you only held shares this would apply on top of any transactions you carry out.
Higher fixed charges pa kick in if you buy property assets as well as 1% of the net (of borrowing) value of the property -

These fixed property charges are more significant

Plus you have whatever the cost of allocation is - I think the allocation rate starts at 95% with no bid/offer spread ......

Re: Standard Life Alternative to Self Admin Pensions/ Good Stock Mkt Investment Vehic

CapitalCCC said:

But that is an anomaly - we see guys with €500k salary getting the 4% relief until they hit the PRSI ceiling when contributions done through payroll - why the BLATANT DISCRIMINATION against people that do not contribute through payroll?

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Just to follow up on this - as far as I know it's fallacious to imply that there is any discrimination here at all. See here and the broader thread in which that post appears.

Cameo thank you for your reply. The charges are very heavy 95 percent allocation, 1 percent admin fee and broker fees as well. Considering you are taking all the risk choosing the shares you really would have to beat the market to make it worth while.

Is any one aware of any other pension companies in Ireland offering a more competitive product that would allow you choose stocks etc.

Maybe if you set out your stall regarding what exactly you are looking for, someone may be able to offer a solution.

What value is in your pension fund at the moment?

What annual contribution will you be making?

Do you require advice on the insured product ie Standard Life or (?) ?

Is it Execution Only Share Dealing only that you anticipate you will be transacting through the pension?

Yes you could set-up a SL pension through some agency for a fixed fee of about 1k to 1.5k per annum...there would then be no 5% charge...the only charge would be the annual fund management charge (usually about 1% per annum).