Eddie Hobbs on the last word yesterday

alibabba

He said putting money into an AVC would be madness at the moment.
How can he be right in saying this.
We had Irish Life in here at work recently getting people to sign up to AVC cos the unit price is very low and cheap at the moment with their funds?

Anyone got a clue ?

Please advise !

TheDriver

I don't know a lot about them but people here at work are saying to avoid them like the plague because those that are in them here are performing very poorly. COupled with the small rumour that pension contribution tax relief might be capped, could be better to hold off for a while

alibabba

I know they are performing very badly, but buying into them now, you are getting them at low prices, so when the markets turn around again, you should make a good return ?

kmick

http://www.finfacts.com/irishfinancenews/article_1016107.shtml

Irish Life has performed very poorly. In general the 10 year performance to say mid 2007 for most of the Irish pension funds has been average and that was before the recession started. Last year Irish life lost nearly 40% on their funds. Not good if you are retiring now.

On the other side of things you are supposed to contribute AVC's in good and bad times which means things even out over time. I personally stopped mine because I could see half of my investment disappearing every month.

alibabba

alibabba wrote: »

He said putting money into an AVC would be madness at the moment.

He was replying to a question from a teacher and his advice was to buy the 'certainty' of Notional Pension Service as opposed to taking a risk with a unit linked investment.

Those in the private sector do do have this option.

Ginger83

Hi all, quick question.

I started a PRSA pension last year with Irish Life, the tax relief was really the only thing that pushed me.

My contributions go into the default plan (consenus s series) but I've watched the plan graphs and this seems to be the worst performing fund of all. There is a cash consenus fund that has steadily made a return, not much 3-4%, 12.4% over the last 5 years.

Would it be in my interest to move my contributions to this fund? I know its not great but wouldn't it be better making something than losing value all the time.

kaiser sauze

AVCs are not a bad option right now, as long as the horizon before retirement is in the distant future.
Persons thinking of doing this should check their occupational scheme to make sure that they are contributing as much as they are allowed before doing so. It may be more cost effective to increase contributions here before doing an AVC.

adrem

AVC's make a huge amount of sense now. Hobbs was suggesting NSP as a better alternative simply because of the certainty it provides at retirement. AVCs are actually more flexible than NSP but you carry investment risk.

Irish Life have performed badly over the past 2 years or so. Their consensus fund has performed in line with the average. A consensus cash fund is a typo or a mistake - there is no such thing. A consensus fund is simply a mechanism to give you the average managed fund without having to buy into each of the individual managed funds. Irish Life's remains the best. Although they would refute this . . . choosing it is effectively a decision NOT to choose Irish Life as your manager. You are effectively saying that you don't want an individual manager and will instead simply take the average return. Not necessarily a bad idea btw