Private Pension Plans

Isoaxe

Hi, just doing a little bit of research for a friend of mine. He has a private pension plan that can be reassigned to a different manager if he wants.

Does anyone know where I can find a list of plans displaying the full amount of management fees? I would also appreciate recommendations on individual plans that have a very low fee structure. A passively managed fund would be ideal (i.e. The pension fund equivalent of an index ETF of passive corporate bond ETF). The idea is to keep management fees to an absolute minimum.

Thanks in advance!

iminireland

You say it is a private pension plan, but is it an individual Personal Pension or a PRSA?

Isoaxe

Sorry about the delay, didn't have access to the internet for a few days there.

It's called an Occupational Pension Plan, and it's with Irish Life. He's able to choose between a range of (actively) managed funds comprising of international equities and bonds. Also allowed to switch from Irish Life if need be.

Kennie1

A Occ pension cannot be transferred to another company by an employee except for when the employee leaves service. The employee can then elect to move the value of their assets to a Buy Out Bond. The Trustees of the pension usually have an arrangement with the Scheme adminastrator to provide a better deal for the employee to purchase a BOB, than what the open market might offer (but not always so take advice)

Kennie1

A Occ pension cannot be transferred to another company by an employee except for when the employee leaves service. The employee can then elect to move the value of their assets to a Buy Out Bond. The Trustees of the pension usually have an arrangement with the Scheme adminastrator to provide a better deal for the employee to purchase a BOB, than what the open market might offer (but not always so take advice)

iminireland

I would need a lot more information to be able to help you properly with your query. If your friend is the director of the company he can probably transfer the pension to another insurance company to invest his money very easily (as he is probably the trustee of the scheme) if he is an employee he will need the employer/trustees to agree to it.

Then he can decide where the money is invested, if the pension scheme is worth in excess of €250k there are structures like Self Administered Pensions where you pay a set annual fee every year and choose where you money is invested. This structure would allow you trade etf's through a stock broker at a low cost. If the value of the pension is a lot lower the best thing to do is use an insurance company who offer indexed funds which usually have an annual management charge of 0.75% a year. Watch out for monthly policy fees as they can significantly increase the costs and entry fees on contributions should probably be about 3% max. If you don't want advice and want cheap go to an execution only insurance website and you can get a pension where the entry charges will be nil.

I recommend your friend talks to an independent advisor initially and then makes a decision. Pay a fee for the consultation and then your friend can decide whether to engage an advisor or make his own decision and take an execution only product. In my opinion picking cheap indexed funds to save money on charges is not a good idea. I won't get into all the details here but a lot of indexed funds in Ireland appear cheap and most of them underperform the market they are supposed to be tracking. So you have a cheap annual management charge and the fund underperforms the market by 0.5% a year = a very expensive fund.