Anyone with an understading of PRSA Fees

lawred2

I've read the pamphlets from a number of PRSA providers but can't find any information on the fees that these companies charge..

Anyone out there have that information to hand or at least where I could get it?

Also, any personal experiences with providers that anyone would have would be welcome..

e: apologies for typo in thread title

Henry Ford III

I can't understand how they aren't explicit. It's essentially their unique selling point.

A standard PRSA has capped charges of 5% initial charge (per premium) plus a 1% annual management charge.

lawred2

Henry Ford III wrote: »

I can't understand how they aren't explicit. It's essentially their unique selling point.

A standard PRSA has capped charges of 5% initial charge (per premium) plus a 1% annual management charge.

Thanks for answering..

5% initial charge of what?

1% annual charge on the current value or any gains made in that year?

Merowig

Overview of all PRSAs:

https://drive.google.com/file/d/0Bwsxfnty94iTallwYUZuLVV1WHM/view?usp=sharing

From the Pensions Authority as per 28.04.2016.



Some of the cheapest so far:
http://www.labrokers.ie/pensions/
1% Annual Management Cost


http://www.davyselect.ie/pensions/personal-retirement-savings-account-prsa.html
0.75% + x (x can be 0.1 etc depending on the ETF you choose).


Neither Davy nor the PRSAs through LA brokers have contribution charges!

I choose Davy as the PRSA for my fiancee - lower fees and I feel confident enough to pick ETFs. If you don't know what ETFs are or learn about this / and have no interest to get involved in your PRSA by actively investing yourself I would recommend to go with one of the PRSAs through LA brokers - where you simply can choose 1 or more funds.

Merowig

lawred2 wrote: »

Thanks for answering..

5% initial charge of what?

1% annual charge on the current value or any gains made in that year?

Many standard PRSAs but not all have a contribution charge of 5% or less - e.g. you invest 100 Euro but only 95 Euro arrive in the fund - 5 Euro are thecontribution charge.
So its legalised robbery.

Go for a PRSA without any contribution charge.

lawred2

Merowig wrote: »

Overview of all PRSAs:

https://drive.google.com/file/d/0Bwsxfnty94iTallwYUZuLVV1WHM/view?usp=sharing

From the Pensions Authority as per 28.04.2016.



Some of the cheapest so far:
http://www.labrokers.ie/pensions/
1% Annual Management Cost


http://www.davyselect.ie/pensions/personal-retirement-savings-account-prsa.html
0.75% + x (x can be 0.1 etc depending on the ETF you choose).


Neither Davy nor the PRSAs through LA brokers have contribution charges!

I choose Davy as the PRSA for my fiancee - lower fees and I feel confident enough to pick ETFs. If you don't know what ETFs are or learn about this / and have no interest to get involved in your PRSA by actively investing yourself I would recommend to go with one of the PRSAs through LA brokers - where you simply can choose 1 or more funds.

Brilliant..

I'm aware of ETFs but not in enough detail but I'll certainly learn.

Thanks.

Henry Ford III

Merowig wrote: »

Many standard PRSAs but not all have a contribution charge of 5% or less - e.g. you invest 100 Euro but only 95 Euro arrive in the fund - 5 Euro are contribution charge.
So its legalised robbery.

Go for a PRSA without any contribution charge.

No such thing as a free lunch.

Consider the costs of buying/selling investments, compliance and regulatory costs, and the cost of distribution, and even a small bit of profit.

lawred2

Merowig wrote: »

lawred2 wrote: »

Thanks for answering..

5% initial charge of what?

1% annual charge on the current value or any gains made in that year?

Many standard PRSAs but not all have a contribution charge of 5% or less - e.g. you invest 100 Euro but only 95 Euro arrive in the fund - 5 Euro are thecontribution charge.
So its legalised robbery.

Go for a PRSA without any contribution charge.

I certainly wouldn't touch anyone taking a contribution charge

Merowig

The annual management charge is of the value of the fund.
You can't avoid this charge but you can minimize it.

lawred2

Merowig wrote: »

The annual management charge is of the value of the fund.
You can't avoid this charge but you can minimize it.

Do Davy have the lowest management charge?

Merowig

lawred2 wrote: »

Do Davy have the lowest management charge?

The lowest I found accessible. Check the Excel I have posted earlier here.

1-2 other providers are cheaper - but only if your fund value is over 2 million.

lawred2

Merowig wrote: »

lawred2 wrote: »

Do Davy have the lowest management charge?

The lowest I found accessible. Check the Excel I have posted earlier here.

1-2 other providers are cheaper - but only if your fund value is over 2 million.

lol

Merowig

Henry Ford III wrote: »

No such thing as a free lunch.

Consider the costs of buying/selling investments, compliance and regulatory costs, and the cost of distribution, and even a small bit of profit.

http://www.irishtimes.com/business/personal-finance/prsas-what-you-need-to-know-as-the-portable-pension-is-set-for-renaissance-1.2431938#utm_sguid=142176,18089016-f410-6683-216f-d3e6fa064cdf



"As the aforementioned OECD report noted, charges on the Irish PRSA product are “substantially” above the levels charged in the best-performing countries such as Denmark or Sweden, where total management fees are below 0.5 per cent of assets under management.
And, when compared with the UK’s auto-enrolment workplace Nest product, the differential in the maximum charges with PRSA are such that it translates into a cut in benefits for the PRSA holder of the order of 12 per cent.
Given this, it makes sense to shop around and seek out the best options and avoid the maximum charges."

Henry Ford III

Merowig wrote: »

http://www.irishtimes.com/business/personal-finance/prsas-what-you-need-to-know-as-the-portable-pension-is-set-for-renaissance-1.2431938#utm_sguid=142176,18089016-f410-6683-216f-d3e6fa064cdf



"As the aforementioned OECD report noted, charges on the Irish PRSA product are “substantially” above the levels charged in the best-performing countries such as Denmark or Sweden, where total management fees are below 0.5 per cent of assets under management.
And, when compared with the UK’s auto-enrolment workplace Nest product, the differential in the maximum charges with PRSA are such that it translates into a cut in benefits for the PRSA holder of the order of 12 per cent.
Given this, it makes sense to shop around and seek out the best options and avoid the maximum charges."

Outperformance will pay for all that and more if you make the correct investment decisions or get the optimal advice.

p.s. Minimise costs by all means.

Merowig

Henry Ford III wrote: »

Outperformance will pay for all that and more if you make the correct investment decisions or get the optimal advice.

p.s. Minimise costs by all means.

Is there any proof that Irish funds/ PRSAs outperform Scandinavian or UK Pension funds?

"If you hire a broker or manager who charges 1% per year then s/he must add more than 1% per year to your portfolio compared to passive index investing to justify the fees."

Most actively managed funds perform worse than passively tracked funds.


Warren Buffet
"My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors -- whether pension funds, institutions, or individuals -- who employ high-fee managers."



For the huge majority of the population there is no value added by paying more.
We had this discussion before - it is about securing ones retirement - not to secure the retirement of a broker/"financial advisor".

Henry Ford III

Agreed there's nothing to be gained by pure repetition but I maintain that the cheapest pension isn't necessarily the best.

burly

How can the likes of Labrokers charge the 0%/1% pension plan and still remain viable?

They say on the website, that for xample, the Irish Life Low Cost PRSA is the same plan as Irish life offer at 5%/1%.

I know brokers generally get the best deals but this seems too good to be true? Is there a catch? The policy is an Irish life policy and administered by Irish Life, so it the case that once you sign up, you no longer deal with Labrokers at all, and your contract is with Irish Life solely?

Merowig

No catch - got a Zurich PRSA for my wife via them. Zurich pays a commission to LA Brokers. Same obvious Irish Life.

There is no advise here - but I would say it would be cheaper to go to a fee based advisor should you want advise at some point.

Geuze

burly wrote: »

How can the likes of Labrokers charge the 0%/1% pension plan and still remain viable?

They say on the website, that for xample, the Irish Life Low Cost PRSA is the same plan as Irish life offer at 5%/1%.

I know brokers generally get the best deals but this seems too good to be true? Is there a catch? The policy is an Irish life policy and administered by Irish Life, so it the case that once you sign up, you no longer deal with Labrokers at all, and your contract is with Irish Life solely?

No catch.

You don't get any advice from labrokers.ie, it is an execution-only service.

No, you have a ongoing relationship with labrokers.ie.

But with no advice.

Henry Ford III

Geuze wrote: »

No catch.

You don't get any advice from labrokers.ie, it is an execution-only service.

No, you have a ongoing relationship with labrokers.ie.

But with no advice.

You'll have to sign a disclaimer and they won't bat an eyelid if you make poor decisions and harm your retirement fund.

The J Stands for Jay

burly wrote: »

How can the likes of Labrokers charge the 0%/1% pension plan and still remain viable?

They say on the website, that for xample, the Irish Life Low Cost PRSA is the same plan as Irish life offer at 5%/1%.

I know brokers generally get the best deals but this seems too good to be true? Is there a catch? The policy is an Irish life policy and administered by Irish Life, so it the case that once you sign up, you no longer deal with Labrokers at all, and your contract is with Irish Life solely?

The 5%(or whatever you negotiate) is generally paid to the broker as commission. In alone cases, the PRSA provider pays more to the broker than is deducted from the contribution. In the above example, labrokers just don't take the commission, so Irish Life don't deduct it from your contribution. The 1% is where Irish Life will pay their costs and try to make a profit.