The cheapest PRSA?

Eaglestar

Ah I see -

If the 1% charge per year is for fund management then the 5% goes to whoever got you to fill in the forms.
 
Re: Eaglestar

Not quite. The 5% bid-offer spread goes to the same people that manage/underwrite the fund in many cases. The difference is that the 5% comes out of each contribution that you make while the 1% is calculated on the total value of the fund.
 
Fund value

Here is some analysis that I have done on this PRSA vs Personal pension for New Ireland.

The prsa will be worth more each year than the value of the personal pension at the begining
(allocation % the big killer)

below is an approx table of when the charges of the personal pension reduce below that of the the prsa
.Also given is the amount by which the PRSA is bigger than the pension at that stage

So assuming that you could move to a personal pension from your prsa in the future for the same deal that you can get today, the year below gives last year that you should stay in the prsa.

Assumptions:6% growth, premium rises by 5%
allocation rate for personal pension is 97.38% when premium is below 508. Rate 98.8% when 508 or higher.


Investment-Amount(monthly)-----Year-------Difference

300-------------------------------12---------1462
400--------------------------------9---------1034
500--------------------------------8----------641
600--------------------------------7----------533
700--------------------------------7----------557
800--------------------------------7----------580
900--------------------------------6----------609
1000-------------------------------6----------640
 
Cheapest PRSA

Myadvisor.ie are currently setting me up with the Eagle Star pension for a fee of 100 euro. This is the pension which was listed on the website and has 0% contribution charges and 0.75% fund management charge.
 
Re: Cheapest PRSA

Hi, just to be clear (and Brendan if you think this too much of an AD, you can take it off or rephrase it) you can buy any pension from MyAdviser.ie for 100 euro but it only saves you a lot of money if that pension provider pays commission to brokers.

Just because I can beat EBS , Quinn, ARK etc by 5% on a Standard PRSA (for example) does not mean you can buy their PRSA for less than going directly to them - you can't.

The New Ireland Offer gives you access to Personal & Executive and for that matter Group Pensions at nil commission for FREE - no fees. I think this is the first time pensions were for free. The PRSA's are at slightly reduced fee of 50 euro.

Once again that Pension Board list is not always applicable to the retail market and only intermediaries can cut intermediary commission.

Regards Michael
Authorised Adviser & Discount Broker
www.myadviser.ie

PS Brendan should you have (or do you have) an area that covers what a discount broker does and how they can save you money?
 
Re: Cheapest PRSA

Michael

I do not consider this advertising. I asked the question in the initial topic and you have answered it and clarified other questions. You are not making any vague or unsubstantiated claims. You are just setting out your terms of business and the rationale behind them.

If any other broker wants to outline their charges, they are welcome to do so.

I will be including Discount Brokers in the new Absolute Beginners Glossary. Do you think that it deserves a separate key post?

Brendan
 
Non Commission Execution Only PRSAs

As a self-employed person whose income varies considerably from month to month, I want to make a single payment annually at the same time as I am completing my Revenue On-Line Service tax return. There is a facility in the Form 11 that automatically calculates the maximum that can be saved to avail of the full tax break - in my case, for 2002, this is around E12,000. Next year it may be E100 or E100,000. I just don't know yet.

As a 52 year old with no pension to date, I want to get as much information as I can so that, using my own best judgement (and accepting that there is a risk of my making a mistake), I can then engage a "non-commission execution-only intermediary" (such as MyAdviser.com). That way, apart from the 1% annual skim, all my money stays in my fund.

The frustration and the hassle begins as soon as I telephone the PRSA providers. Quite simply, their call-centre staff will not answer questions about their company's products if I am not going to use them to open the PRSA. "Ask your Broker" is their standard reply. The moment I ask a broker, I cease to benefit from the "non-commission execution-only intermediary" discounts.

I thought we were supposed to be a Republic. How come then that a bright, intelligent, well-educated private citizen (as I flatter myself to be), but one without a degree in Finance or Economics or Pyramid Selling, is completely flummoxed by jargon, twisting and half-facts circulated by the econoscavengers? No wonder whole sections of the public have given up believing in politicians and participation.
 
Re: Non Commission Execution Only PRSAs

Hi, just to try to make things clear there is a market for pensions and life assurance in Ireland and it is much like many other markets. The providers of these services have wholesale prices and retail prices - much like any other business. The wholesale prices are used for intermediaries/brokers/accountants etc and the retail prices are used by this latter group and the providers when dealing with the public. This is no different than any other business which sells through intermediaries.

Even the direct providers (e.g. AIB & BOI) who do not pay broker commission are selling at the market rate for PRSA's. They (especially AIB/EBS) have long been in the business of thinking they offer lower cost alternatives but now that they have the chance to prove it they cannot or won't do it. They could have set a 4% entry charge or 3% but hey went with the industry maximum of 5% entry charge.

It is up to the intermediaries to sell at discount prices, if that is the way they want to run their business. The providers tell customers to "talk to your broker" because they will not discount their price and undercut their intermediaries. Just because a customer knows that their is such a thing as nil commission prices, does not mean they can access them from the provider. There is over a 100% mark-up on cloths between the wholesale price and the retail price but that does not mean we all can get wholesale prices. Try ringing a car manufacturer and asking to buy from them direct at their gate prices and see how far you get.

In conclusion there is no point asking the provider to undercut their wholesalers (brokers etc) and in my opinion that is fair enough and is in line with being in a republic and a free market. Simply use your humble discount broker and save a fortune.

I hope this helps.

Regards Michael Kiernan

Authorised Advisor & Discount Broker
www.myadviser.ie
 
Information

Tim,

As a self employed person you should understand that if all your clients rang you up looking for information, for free, on what products or services you provided then you wouldn't be in business very long. Would you? Why should it be any different for financial services?

AAM is where you get the 'Free Stuff'.
 
Novice question

Hi there,
I'm only reading up on PRSA's now but one question, the entry fee of 5% - what does this apply to - is it 5% of your first payment? Sorry if that sounds like a daft question! I'm thinking of just making payments of 100 Euro per month initially so I'm curious whether this New Ireland product would be worth joining or if the fees mentioned would be very little anyway for this contribution amount.
 
Re: Novice question

Hi, the 5% is on all contributions when ever they happen. So if you invest 100 euro then 5% goes in charges. With MyAdviser you can buy most of the PRSA's in Ireland (Eagle Star, Irish Life, Standard Life etc.) for just 100 euro (New Ireland offer 50 euro) and you will never have to pay the 5% entry for the life of your PRSA.

There is no advise or service associated with this service but you do save a lot of money.

Regards Michael

Authorised Adviser & Discount Broker
www.myadviser.ie
 
Quinn Life

MyAdvisor, Quinn does not have PRSA's but the personal pension has 1% admin charge, no 5% up front. I have just put in lump sum and that's the terms quoted to me.
 
Re: Quinn Life

QL impose a flat charge of €3.81 on monthly contributions (as opposed to lump sums such as your own) which could work out expensive in percentage terms depending on the amount (e.g. 3.81% on a €100 per month contribution). QL are pretty competitive on personal pension charges generally but a PRSA with, say a €100 up front arrangement fee and no 5% contribution charge, will most likely work out better value!
 
Here Today

Just a thought

This PRSA pension will generally be paid out in 20-30 years time. If a piurchaser thinks all of the current small life insurers in Ireland will be there at that time, then they are sadly mistaken. I think as well as price - and price is very important - it is nice to know who is going to be paying your pension. It will not be some of the names mentioned - but I guess they will have been bought by a bigger player.

It is a factor that there is little comment on but ask any broker about current service levels from Scottish Provident.....and it might show how important this factor can be in practice
 
Re: Here Today

Predicting which PRSA providers will still be in business in 20 years time is a bit like predicting who is going to deliver the best investment performance - i.e. a waste of time.

If you have a Scots Prov PRSA a you're unhappy with service levels, you're free to switch penalty-free to somebody else. Simple as that.
 
LA Brokers

From what I can see LABrokers are offering a PRSA through Irish Life with the following conditions :
1. Entry charge 0%. This for the lifetime of the policy
2. A fund management charge that decreases from 1% to 0.85% as the fund increases.
3. No Fee.

This seems better than the New Ireland one.
Although I am only investigating at the moment.

Any thoughts ?
 
PRSA Charges & Offers

Hi, just to update you all on the issue of offers the €50 & €100 euro offer for PRSA's is no longer available on MyAdviser.ie

What has replaced it is an offer with New Ireland & Eagle Star's PRSA where the entry cost is reduced from the usual 5% to 2% for the life of the plan. The only other charge is the 1% p.a. management charge. There are no fees to pay MyAdviser for this service. These two providers received the highest scores in the Consumer Choice Survey of PRSA's.

If you want investment choice Eagle Star's Non-Standard PRSA is also available at these rates.

This is an execution only offer but ongoing service is included. If you want advice on pension planning and a complete review of your finances before you buy a PRSA then this is available for €300.

Advice on the issue of pension selection is very important as the charges on a PRSA even discounted ones do not always result in you getting the best deal.

There is an offer from Hibernian at the moment (via MyAdviser.ie) where you could get a personal pension with a 0.75% annual management charge and in some cases a higher allocation rate (greater than 98% after commission). This can be better value especially for lump sums.

Recently I did an assessment for a client of a nil commission PRSA compared to a 3% p.a. commission based Personal Pension and here are the results.

CLIENT DETAILS
Aged 32 next birthday retiring at age 65, earning 50k p.a., contributing 500 per month with a 3% p.a. inflation rate on contributions. All illustrations have a 6% assumed growth rate (not guaranteed).

PERSONAL PENSION DETAILS
97% allocation, 4.44 per month policy fee and a 0.75% annual management charge.

PRSA DETAILS
100% allocation, 0.00 per month policy fee and a fund management charge that decreases from 1% to 0.85% as the fund increases.

RESULT
The fund value at age 65 was as follows;

Personal Pension = €780,325
PRSA = €754,792

Even at age 60 the PRSA was poorer value

Personal Pension = €540,511
PRSA = €523,104

It is important to point out that different ages, terms etc can impact on which pension offers best value - thus the need for advice. It is also a key issue to assess the ability of your fund manager to deliver results (controversial thing to say on this site).

Regards

Michael Kiernan
Authorised Advisor & Discount Broker
www.myadviser.ie
 
Re: PRSA Charges & Offers

Hi Michael

Thanks for the update.

I am not sure that your client is better off going for the Personal Pension. He is 32, and if all the factors favour the personal pension, he will be better off in 28 years time! Presumably, the PRSA will be ahead for the first 28 years.

In ten years, he will have a decent sized pension and will be able to shop around for a better deal elsewhere - and there will be no charges for tranferring to a new provider.

In decisions like this, I think a person is better off going for immediate value rather than some long term value which might never materialise.

Brendan
 
Re: PRSA Charges & Offers

> It is also a key issue to assess the ability of your fund manager to deliver results (controversial thing to say on this site).

I don't think that's necessarily contentious but I would be curious as to how you or anybody else would tackle this with any degree of accuracy given the prevailing feeling in most quarters about past performance...?
 
the cheapest PRSA

Does the 1 % annual charge on managing a PRSA apply to the overall fund at each year end or just on that years contributions?Say the fund was worth 1 million euro at age 60,in that year would the provider hit you for a 10,000 euro charge?
 
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