Are pension charges fair?

ClubMan

Registered User
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Depends on what €190 is when expressed as a percentage of the overall current fund value. If the plan is new and was not "seeded" with a significant lump sum then this percentage would be very large. Annual management charges of c. 1% would normally be considered reasonable/competitive but they can go slightly lower and significantly higher. If €190 is a fixed charge (i.e. not indexed linked or subject to review or whatever) then the "annual management charge" as a percentage of fund value will presumably effectively reduce over time. Once the fund is worth €19000 plus the effective annual management charge would be c. 1% and presumably falling. Are you at liberty to divulge any more information about this plan - e.g. who sold it, who manages it etc.?
 
Clubman,

Hibernian Open Plan pension bought through Hibernian branch. Started 2001.

No bid/offer fees, no monthly admin fee, no allocation rates.

The buyer didn't really realise that there was 8% commission on the policy. They thought by going to branch it would be cheaper than broker. As well as the 8% there was also an annual IR£150 "Plan Mgt charge". No mention of this fee changing.

A year later they copped on to the commission and switched agency from branch to nil-commission broker. So now just seems to be the annual 190 euro charge.

Contango10
 
A friend is paying about 130 a month into a private pension, nil commission basis. No annual fund mgt charge, but there is an annual plan mgt charge of 190.

Is this good value????

Contango10
 
Hmmm... so let's assume that the fund has attracted 24 monthly payments of €130 to date (= €3120) and is worth roughly €4,000 today (which is probably very optimistic given the initial commission and recent market performance) which means that €190 is similar to a management charge of c. 4.75% for the current year. Given that it's possible to get pensions (e.g. PRSAs) with no charges other than an annual management charge of 1% this doesn't seem like a great deal and that annual charge represents a real drag on fund performance. Doesn't seem like a great deal to me unless I'm missing something obvious or otherwise here. Why did they choose Hib?
 
No, Clubman, you are not missing anything. The scenario you outlined is correct.

Is it really possible to get PRSAs with JUST a 1% annual fund mgt charge, no other charges at all?

They choose Hib, as they were in the branch for a motor quote, and were asked "do you have a pension, etc.". That's how they ended up with the policy.

C10
 
Is it really possible to get PRSAs with JUST a 1% annual fund mgt charge, no other charges at all?

Yes - Michael Kiernan of www.myadviser.com mentions them and I believe that Liam D Ferguson of [broken link removed], and presumably (many?) others, offer similar deals.

They choose Hib, as they were in the branch for a motor quote, and were asked "do you have a pension, etc.". That's how they ended up with the policy.

Oh dear... :\
 
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