Standard PRSA Vs PRSA Preformance Irish Life

FMI

Hi,

I met with an irish Life representative and a bit confused i told him im medium risk, would consider high risk at present for next 15-20 years as 30 at present. He has pushed me towards the Irish life Performance PRSA as i can pick my own funds ~14 or so etc, but with this there is the 5% contribution charges 1% management fee and ~1.25% - 2% depending on the fund i pick.

But with Standard PRSA there is only three options low risk medium and high risk (consensus fund), i just dont know what to pick. With the standard PRSA i found company which has been already recommended on here a few times who offer the Irish Life without the 5% charge for contribution so you only paythe 1% management fee but its only for the standard PRSA.

Can someone offer a bit of clarity, i personally am a bad gambler with football etc bet with my heart and hope so i wouldnt consider myslef a major risk taker and would be afraid dabling in japanese market or china market even if returns could be massive and affraid of the additional charges associated with this policy.

Any advice appreciated.

Thanks,

FMI

Andymfinancial

FMI wrote: »

Hi,

I met with an irish Life representative and a bit confused i told him im medium risk, would consider high risk at present for next 15-20 years as 30 at present. He has pushed me towards the Irish life Performance PRSA as i can pick my own funds ~14 or so etc, but with this there is the 5% contribution charges 1% management fee and ~1.25% - 2% depending on the fund i pick.

But with Standard PRSA there is only three options low risk medium and high risk (consensus fund), i just dont know what to pick. With the standard PRSA i found company which has been already recommended on here a few times who offer the Irish Life without the 5% charge for contribution so you only paythe 1% management fee but its only for the standard PRSA.

Can someone offer a bit of clarity, i personally am a bad gambler with football etc bet with my heart and hope so i wouldnt consider myslef a major risk taker and would be afraid dabling in japanese market or china market even if returns could be massive and affraid of the additional charges associated with this policy.

Any advice appreciated.

Thanks,

FMI

The charging structure for that is appalling. Do not accept it. Why not go for a personal pension with Irish Life which offers greater number of funds. Depending on what you are paying per month a 1% annual charge with 2% charge would be more appropriate

FMI

Hi Andmyfinancial,

Dont understand your post regards charging structure? i will try to repharase my question with more detailed information that i have learned in past few days. I don't want to get pension as i don't know how long i will be with current employer and if i was not working would still like to make contributions.

I have two options with Irish Life, a standard PRSA and a Performance based PRSA.

Standard PRSA has 5% contribution charge and 1% management annual fee. 3 funds to invest in.

Performance PRSA has 5% contribution charge and 1% management charge plus additional 1%-2% depending on the fund i choose i.e. Japan market etc. 14 funds to invest in.

With Standard one above it can be purchased on execution only basis with a broker named alot on here with the only fees being the 1% management charge, which if i was putting away 10k per year away for 30 years that equals ~€15k in commission which i assume is better invested than spent on commission to a provider.

Even if i did choose the Performance PRSA which can be said to have better returns there is no gurantee and at same time its a guessing game as i dont know enough about the markets.

It appears that the standard one satisfies my needs i would just like put money away for next 25 years in high risk consensus fund and closer to retirement take that money out. If i was to start using Performance and investing in India and China etc i would be terriefed that i would blow my investment and consensus seems to spread its investment accorss various funds, if my memory serves me correct ~60equity, 20%property and rest in bonds and cash.

My main question is over that 30 year period could there really be a drastic difference in return if i invested in preformance Vs High-Risk Consensus? I know its really an open question.

I am siding towards execution only, can also be set up through employer? will i get PRSI and tax relief on execution only or do i have to go through revenue myself?

Thanks for reading above and any comments really appreciated.

Cheers,

Patrick

BiddyBop

Hi FMI

With any Standard PRSA there must also be the Default Investment Strategy Investment Option. Has this been discussed with you? With this your money will automatically be moved in to lower risk funds to protect any money you have accumulated in your fund as you approach your retirement date.

There are max charges which can be applied to Standard PRSAs which are as you outlined - 5% contribution charge and 1% management charge.

There is a risk with any investment involving equitites as you know but they will also probably give you the best return over time. By the sounds of things you have a long way to retirement and you will receive six monthly statements to help you see how your fund is performing.

Has your employer already designated a specific PRSA provider? If so and you decide to go with another they may not facilitate your deductions through payroll. Execution only won't affect whether you get your tax relief, you can always get your PRSI and tax relief, just if your Employer won't faciliate it you will need to apply to the Revenue for tax credits directly.

FMI

hi Biddybop,

Thanks for that, employer will facilitate who i choose... some people are with AIB and 2 people with BOI already, just didnt bother consulting with AIB or BOI just on principal. Like you say i've a long way to go and hopefully pick up pointers and gain more knowledge over the years, plus as far as im aware i can move my PRSA to different providers according to Irish Life representative.

Thanks for advise think i will go with excution only and try to develop my knowledge over the years and possibly get and pay professional advice after 5 years if i find investment has not grown as expected.

Cheers,

FMI

Andymfinancial

FMI wrote: »

hi Biddybop,

Thanks for that, employer will facilitate who i choose... some people are with AIB and 2 people with BOI already, just didnt bother consulting with AIB or BOI just on principal. Like you say i've a long way to go and hopefully pick up pointers and gain more knowledge over the years, plus as far as im aware i can move my PRSA to different providers according to Irish Life representative.

Thanks for advise think i will go with excution only and try to develop my knowledge over the years and possibly get and pay professional advice after 5 years if i find investment has not grown as expected.

Cheers,

FMI

You would be better asking a broker to put it in place. A 5% contribution charge is too expensive. You could go through the broker and he would manage it for you and give you and give you ongoing advice as to which funds to invest in that are relavent to your attitude to risk. In relation to PRSA versus personal pension the irish personal pension has a far better charging structure than that. I understand your comment that you may lose your job but would you really continue paying if you had no work?