Help... terminology and charges on my personal pension

raspberrypi67

Hi Folks,

I have a quick question on some of the jargon I dont understand with pensions and although I've asked my financial

adviser and New Ireland, I'm not getting very far.

Ok, I have a pension going, private, since 1995. I'm 57. I l looked at the annual statement this month and saw a charge of about 610 euro. It came under the heading of 'Contributions and charges' . I needed an explanation for this as I had not really noticed this before.

Long story short , I get something like the following back from my financial broker as follows, ' The charge of 3% is 102% less 5% which is equal to 97% allocation of your total contribution.

Now, I have no idea if this is good or bad. Can I reduce this charge? Why am I being charged this?? I dont even understand this . I am NOT a financial person. I suppose I should educate myself better but the Financial broker cant even speak in English about it.

I'm told this is some sort of charge which originates from back in the day when this was formulated. I'm told I can change my policy to get rid of this, well, my question is, why wasent i informed that this charge could be done away with. Or is it necessary with the type of investment funds I have.

I also rang New Ireland, they have to pass it to a senior member as the rep that was on to me has no clue what its about either.

I just cant get any answers as to what this is , why its a charge, does anyone else have this type of charge on their Personal pension ?

Any information would be great…

Thanks alot

Henry Ford III

97% allocation is not great at all these times. Might have been ok when you took this policy out.

If your Broker can't or won't help you perhaps it's time to go to someone else who can?

Geuze

97% allocation means that for every 100 euro that you contribute, 3 euro is taken in charges, and 97 is put into the fund.

You can easily get a pension with 100% allocation.

This contribution charge / allocation rate is separate from the annual management charge.

raspberrypi67

https://www.boards.ie/discussion/comment/122832942#Comment_122832942

Thanks for the information. I dont understand why I need to pay this charge, legacy from the 90's, not sure. Would my pension have a performance issue I wonder if I'm to change this. Should I not have been told this was the case and I had an option to change this over the years… ?

I have been told by the broker I can create a new policy to get rid of this charge, but they still fail to tell me why I ever had this charge in the first place.

Jim2007

https://www.boards.ie/discussion/comment/122834059#Comment_122834059

Nobody is in this business to make you rich, they are in it to make a profit. Now I don't know for certain, but I'd be very surprised if you were not informed about these factors, because these companies have armies of legal teams to ensure that they do. It's probably somewhere in the paper work or you just did not understand why you were told.

As to whether you should change or what the performance impact might be, we can't say because we have no information on what your are currently invested in and what you are intending to move to…. I'd expect the fees over that period to have had an impact on performance, but then again I have no idea what the performance was! I have seen funds with high fees deliver significant performance above the market and I have seen the opposite too. But without information on your exact situation, we just don't know.

Geuze

https://www.boards.ie/discussion/comment/122834059#Comment_122834059

Yes, these fees were higher in the past.

Unknown to myself, as there was no disclosure, I had a personal pension with Hibernian where the sales agent got 8% on each and every contribution.

After I educated myself, I made that policy paid-up, and transferred it to a discount broker.

raspberrypi67

https://www.boards.ie/discussion/comment/122834372#Comment_122834372

Thanks for that Jim…appreciate the information….

Your probably right in saying that it may well have been mentioned but also, I have a financial broker, LHW, that deal with this for me. I've asked many questions with not too many answers. I would have thought it their job to inform of this kind of charge can be done away with. One comment I got is, I could get another policy to stop this charge. Still have to talk properly to the person I normally do . Not a great service in my eyes if they cant or couldn't have given me a heads up to make it 100% allocated. I had a lengthy chat with the financial director of the place at the time and no mention of me getting it to 100% allocation. Surly this charge would stick out like a sore thumb. I'm not sure who gets this charge, I think its New Ireland.. but I could be wrong.

New Ireland have actually mailed me at least to say that a 'Senior member' is looking into this. The person yesterday couldn't tell me.

What gets me is that you'd swear that pensions only came out last year. New Ireland are around since the 70's from what I have read, there must be other people on 97% allocation and are not even aware that this can be changed, from what I'm led to believe, to 100%. Funny too with the 'Jargon busters' , pension terminology explained and yet it dident explain my extra 'contribution charge'; you ask the questions to them and they don't have the knowledge or experience to give you an answer.

So disingenuous imo…

The J Stands for Jay

The charge on your pension can't be changed, but they are suggesting you can set up a new pension without this charge and transfer the old one into it.

Jim2007

https://www.boards.ie/discussion/comment/122835043#Comment_122835043

Brokers are not financial advisors nor are asset managers or pension funds etc….. they all have skin in the game.

You need to consult an independent financial advisor or planner to get actionable financial advice.

Henry Ford III

https://www.boards.ie/discussion/comment/122835208#Comment_122835208

No point in employing both though.

The "old" pension in this case has 97% allocation, but what else does it have? The AMC will be low I'd guess (probably lower than what's on offer today), and it might feature some sort of rebate (loyalty bonus) or even bonus units allocated later?

So employing someone who knows, or can find out the real effect of any charges, is essential.

Looking at allocation rate in isolation won't necessarily provide the clearest picture.

p.s. Once again OP you don't seem happy with your advisor. You aren't getting answers. Why not take your business elsewhere?

Jim2007

https://www.boards.ie/discussion/comment/122838447#Comment_122838447

He needs to have someone look at his over all situation and in my experience that is not a broker.

The J Stands for Jay

https://www.boards.ie/discussion/comment/122838447#Comment_122838447

It might also have a bid offer spread and an initial unit charge.

raspberrypi67

Thanks for the comments. My broker couldn't answer my questions. Its been referred or 'queried out' to New Ireland. I actually have the original plan etc from the person who set my pension up back in 1995!

So I have to wait and see what they come back with…

I did get some idea from the broker saying that it could be that there are some sort of bonus points at the end , meaning, and this is quite loose from me as I know nothing about funds, tht for every 5-10 years I'd get a 3% bonus on my net fund. Whatever that entails?? So said it could be quite an amount, quote unquote, ..!

Well, I wait with baited breath…