Private Pension Questions

blackmadra

I have been paying 5% of my salary in a private pension fund for the last 5 years or so. My company matches my contribution up to the 5%. They have a pension broker who comes to meet us every few years to make sure we are happy with everything. I have recently become aware that the fees that we are charged are quite high and I think they cut quite significantly into the total value of my fund. As I understand, everyone in the company is on the same plan, but we get to pick our own individual funds to invent in.

Would it be possible for me to switch my pension to some other scheme where it is simply linked to the main share index and avoid paying fees to the provider? I certainly wasn’t given this option when by our pension broker when he came in to meet us.

As you can probably tell from the way my question is phrased, I do not work in finance nor have I much of a clue how it all work so apologies if something I have said doesn't make sense! Thanks in advance for any advice.

Merowig

If the employer is matching your contributions I don't believe that if you open your own PRSA he will match contributions you made towards a private prsa. You can perhaps ask though.


You can check what fund options the provider is offering - but the impact on fees will be limited.

If you want to contribute more / making Additional voluntary contributions you should open a low cost PRSA.

You can have perhaps a chitchat with the HR colleague who is looking after benefits and mention the high costs - perhaps the employer might change the provider or can negotiate a better deal.

Avatar MIA

Usually self managed funds can be (ironically) very expensive, and would typically be used by people contributing 10s of thousands per annum and would have a good knowledge of stock markets.

If you post up the actual fees it will help people to advise you.

You should have an option of a PRSA (don't understand why having a PRSA would mean the company not matching your contributions).

Merowig

Avatar - am pretty sure if I would ask my employer to contribute his matching amount to a PRSA instead to the companies DC scheme the answer will be no.
The OP can ask but I will also expect a no from the employer there.

Davys self serving PRSA is "cheap" (for Irish standards) - including costs for investing in an ETF. Then you have managed PRSAs who charge the 1% AMC and that's it.

skippy2

+1............If you post up the actual fees it will help people to advise you.

would also be interested in knowing what fees you are paying

blackmadra

Thanks guys for the responses. I am charged 5% on the total monthly deposit and at the end of the year they take 1% of the total value of the fund.

Avatar MIA

blackmadra wrote: »

Thanks guys for the responses. I am charged 5% on the total monthly deposit and at the end of the year they take 1% of the total value of the fund.

:eek: 5% plus 1% cumulative! Do they send you birthday and Christmas cards?

With that said, what kind of gains are you getting? Is your pension outperforming the market or at least gaining compared to the amounts invested?

Geuze

blackmadra wrote: »

Thanks guys for the responses. I am charged 5% on the total monthly deposit and at the end of the year they take 1% of the total value of the fund.

These are sadly typical in Ireland.

5% charge on conts and 1% AMC on the fund.

It is possible to get a PRSA with 0% cont charge and 1% AMC, but you may be stuck with what your employer did [or didn't] negotiate.

skippy2

Policy Fee 5.45 per month
Pension Board Fee 8.00 per annum
5% Bid Offer spread

Annual Management Charges
4.75 to initial units
0.75 to accumulator units
At retirement age the fund is increased by 6% Bonus

Can anyone advise/say if this is good or not

For example if my yearly statement says
100k in initial units......means 4,750 was taken in fees here yearly
200k in accumulator units.....means 1,500 was taken in fee here yearly

Can someone explain the bid offer spread. Is this with regard to my monthly contributions
So if i make a monthly contribution of say 1,000 how does this work


just trying to understand my own fees

daveharnett

blackmadra wrote: »

Thanks guys for the responses. I am charged 5% on the total monthly deposit and at the end of the year they take 1% of the total value of the fund.

The fees are as high as they are legally allowed to be, but the employer match makes it unbeatable value.

It's worth asking, but I'd be surprised if your employer will match contributions to any other provider - their selected provider is taking some work off their hands.

ftse100

skippy2 wrote: »

Policy Fee 5.45 per month
Pension Board Fee 8.00 per annum
5% Bid Offer spread

Annual Management Charges
4.75 to initial units
0.75 to accumulator units
At retirement age the fund is increased by 6% Bonus

Can anyone advise/say if this is good or not

For example if my yearly statement says
100k in initial units......means 4,750 was taken in fees here yearly
200k in accumulator units.....means 1,500 was taken in fee here yearly

Can someone explain the bid offer spread. Is this with regard to my monthly contributions
So if i make a monthly contribution of say 1,000 how does this work


just trying to understand my own fees

A 5% B/O spread is awful. A Bid Offer Spread is basically a difference between the price you buy into a fund and the price you sell out of a fund. As an example, lets say today the fund has a Bid Price of 1.00 and you buy 10 units in the fund. This will cost 10.00 (1.00 * 10). If the Bid Price stayed the same lets say and you went to sell your 10 units. they would sell at a price of .95 each so (10* .95) due to the 5% Spread. So you're at a 5% loss straight away assuming the value of the fund stays the same. So an approx market move of just over plus 5% allows you to break even. I didn't realise bid offer spreads were used much anymore.

As it is a pension though you wouldn't be selling out of the funds often unless you were moving from Mayne an equity fund to Bond fund as you get older..