Which pension fund

[Oisin19]

Its relative to the service provided. if your advisor is putting the work in and adding value the fee is worth it. If your advisor is only executing for you then there should be no trail fee.

Say you have a client that is 70 with an ARF worth 1.5m. The fee would be 7,500.

Service could involve the following:

4X Meetings a year,
Managing the investment strategy,
Managing client anxiety especially with markets being volatile,
Providing Financial Modelling,
Providing estate planning services
Contantly reviewing the plan.
Managing admin of policies
etc.
Then there is all the compliance regulations that they have to comply it.

For all the above 7,500 is cheap! The fee is worth it for good advisors.

 

[Steven Barrett]

All I can say is that while looking around for pensions, 1.25% AMC was common enough. I contacted the pension provider directly and now have the exact same pension setup at 0.75% AMC.

I do fully accept that the advisory services with this direct approach are much more limited than going through a broker and this is a call people need to make themselves. I also understand that brokers have to wait a long time to actually make money at 0.5% when pensions start from.

However looking at a 25 year build up towards a €1m pension that extra 0.5% AMC represented €60k in advisory fees; I personally felt more comfortable buying advisory services myself as required, doubting I will get anywhere near €60k.

The same charging structures are available to direct sales team and independent advisors. There is an advisor fee in both instances that you mentioned. The direct sales teams tend to be on commission only, so they eat what they kill. They don't however, have to pay rent, software, admin etc that an independent has to pay. A lot give no follow up service either.

The 0.75% suits you fine. Not everyone needs an ongoing service from an advisor but it is important to be aware that going direct doesn't mean you avoid an advisor fee, you are paying a commission.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Zenith63]

Its relative to the service provided. if your advisor is putting the work in and adding value the fee is worth it. If your advisor is only executing for you then there should be no trail fee.

Say you have a client that is 70 with an ARF worth 1.5m. The fee would be 7,500.

Service could involve the following:

4X Meetings a year,
Managing the investment strategy,
Managing client anxiety especially with markets being volatile,
Providing Financial Modelling,
Providing estate planning services
Contantly reviewing the plan.
Managing admin of policies
etc.
Then there is all the compliance regulations that they have to comply it.

For all the above 7,500 is cheap! The fee is worth it for good advisors.

The fee is €7500 for that year only, they also paid €7450 the year before that, and €7400 the year before that etc since the policy started. The total fees for the 20-25 years they’ve built up that pension would be closer to €75,000. That’s the figure people need to consider when deciding if it is worth it.

 

[Homelandfan]

going back to cremeegg's original point about moving a UK pension back to Ireland; is the buy out bond the preferred option? Would a QROP to Malta be another/better option? QROP or another name for them is (European Union Retirement Benefits Scheme). I am no expert, just something I have come across online so its a genuine question.
Some background info here
note I have no connection with and am not endorsing this company - just curious if anyone here has gone down this route and would like to share their experiences, benefits, snags etc

 

[Gordon Gekko]

So what is the total annual cost of the cheapest passive Buy Out Bond and who’s it through?

 

[Steven Barrett]

So what is the total annual cost of the cheapest passive Buy Out Bond and who’s it through?

I deal with Zurich, Standard and ITC for QROPS. Zurich and Standard have 0.5% as their lowest AMC. Standard have a few Vanguard funds with a .1% rebate on them. ITC have a 0.4% amc with access to a fund platform where you can chose any fund/ ETF

I believe Davy have a QROPS approved product too but I don't use them.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[GSheehy]

So what is the total annual cost of the cheapest passive Buy Out Bond and who’s it through?

It depends.

You're going to get a better AMC from the discount broker/provider if you have €750,000 as opposed to €7,500 to invest.

 

[Sarenco]

Zurich and Standard have 0.5% as their lowest AMC. Standard have a few Vanguard funds with a .1% rebate on them.

Hi Steven

An effective AMC of 0.4% looks very competitive in the current market.

Would it be possible to get an allocation rate (less any commission) of 100% on a single premium of, say, €100k? Any policy fees applicable to that contract?

 

[Steven Barrett]

the base allocation is 100% (see the correlation between allocation rates and management fees ).No policy fee. Early exit penalties apply for the first 5 years. If you want no exit penalties, the AMC is 0.5%. That only applies to a selected amount of Vanguard funds which attract an additional .1% discount.



Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Sarenco]

Thanks Steven but could you clarify what you mean by the "base" allocation? Does that mean the insured only receives a 98% allocation if the broker takes a 2% commission?

What is the lowest AMC with a 100% allocation?

 

[Qwerty22]

Can I ask why you need to transfer your pension at all?

I know there's all this messy Brexit stuff coming up, but would it be possible to keep it in the UK where there is much more choice? Is the fund being wound-up, or are there other legal restrictions forcing you to move?

Or if you feel you have to move it out of the UK, keep it there until the Pan-European Pension Products become available in a couple of years time, and move to a much lower-cost German or Dutch provider who'll have larger economies of scale, won't have such high charges, or compel you to go through an artificially restrictive broker network.

 

[Steven Barrett]

Thanks Steven but could you clarify what you mean by the "base" allocation? Does that mean the insured only receives a 98% allocation if the broker takes a 2% commission?

What is the lowest AMC with a 100% allocation?

The starting allocation is 100%. If an advisor charges you 2%, you will get 98% of your contribution invested. Or you can pay them a fee so nothing is deducted.

Some providers offer an allocation of 105%. An advisor may take 2% and you get 103% or they may take the entire 5% and you get your €100k invested. But the management fee on this type of contract will be 1% as the life company needs to recoup that extra 5% through higher ongoing fees.

There are loads of different options in between. And that's just single premium contracts. The monthly premium contracts have even more options

It's as clear as mud.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Sarenco]

It's as clear as mud.

Well, it certainly lacks transparency.

I don't really have an issue with the complexity of the charging structures (they're really not that complicated) - I just wish pension providers would publish their pricing options so consumers could check whether or not they are being ripped off by intermediaries.

It's amazing to me that the Central Bank allows this lack of transparency to continue.

 

[Qwerty22]

It's amazing to me that the Central Bank allows this lack of transparency to continue.

The Central Bank's website has a complaints email - enquiries@centralbank.ie - although with a name like "enquiries" I wouldn't hold my breath.

They also link to their Code of Conduct, page 32 of which mentions that all regulated entities should have their charges "easily accessible to consumers". However, I'm sure they'd all claim they were clearly marked in the Douglas Adam's sense: "It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying ‘Beware of the Leopard.'"

If someone came up with some good wording to send to the Central Bank's complaints address, then maybe some contributors on this site (without a vested interest in maintaining the status quo) could be persuaded to write to them...

 

[Steven Barrett]

Well, it certainly lacks transparency.

I don't really have an issue with the complexity of the charging structures (they're really not that complicated) - I just wish pension providers would publish their pricing options so consumers could check whether or not they are being ripped off by intermediaries.

It's amazing to me that the Central Bank allows this lack of transparency to continue.

The Pensions Authority has a list of all authorised PRSA and the approved charging structures. How many people look at that? Most people aren't aware its there.




Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Sarenco]

The Pensions Authority has a list of all authorised PRSA and the approved charging structures. How many people look at that? Most people aren't aware its there.

Well, I certainly didn't know that – here's a link for anybody that's interested:
https://www.pensionsauthority.ie/en/PRSA_Providers/PRSAs/

Not sure where the execution-only PRSAs that are available through discount brokers fit into that list.

 

[Steven Barrett]

Well, I certainly didn't know that – here's a link for anybody that's interested:
https://www.pensionsauthority.ie/en/PRSA_Providers/PRSAs/

Not sure where the execution-only PRSAs that are available through discount brokers fit into that list.

Discount brokers aren't PRSA providers. They use Zurich Life or Irish Life who offer the PRSA at 100% allocation, 0.75% amc. They add 0.25% amc onto it which is their margin. Those contracts are available to all advisors. Discount brokers need to generate numbers for it to pay for itself. Wouldn't be my target market.

Did you read the fees?
€20,000 to apply for a PRSA and €5,000 for each additional product. Then €2,000 a year for each PRSA product and 0.05% of the amc as at 31 December of that year. Not much margin for a life company.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Oisin19]

Well, it certainly lacks transparency.

I don't really have an issue with the complexity of the charging structures (they're really not that complicated) - I just wish pension providers would publish their pricing options so consumers could check whether or not they are being ripped off by intermediaries.

It's amazing to me that the Central Bank allows this lack of transparency to continue.

They should have to send a statement to the policy holder each year showing all the fees deducted and commissions paid and to whom they were paid. The MIFID firms have to do it for some of their products but I don't know why the insurance industry get away it. Great lobbying id imagine

 

[Sarenco]

Discount brokers aren't PRSA providers. They use Zurich Life or Irish Life who offer the PRSA at 100% allocation, 0.75% amc. They add 0.25% amc onto it which is their margin

That's interesting. So do the life companies retrocede the additional 25bps to the discount broker on an annual basis?

It seems weird to me that anybody would get paid anything material (particulatly on an ongoing basis) for effectively just passing on a blank form.

I'm obviously in the wrong business...

 

[Conan]

I

That's interesting. So do the life companies retrocede the additional 25bps to the discount broker on an annual basis?

It seems weird to me that anybody would get paid anything material (particulatly on an ongoing basis) for effectively just passing on a blank form.

I'm obviously in the wrong business...

To be fair, Brokers do more than just passing on a blank form. If clients want advice about establishing a PRSA, which provider, what fund(s) etc, then it must be paid for. And if the client wants ongoing advice that also must be paid for. Brokers are not charities. You are paying for advice, experience etc.
Similarly if you go to a Solicitor to complete a Will, they could give you a pro-forma document and you fill in the blanks. But again you are paying for advice and experience.
If you don’t want any advice, you know exactly what you are doing etc, then don’t use a Broker.