Cornmarket AVCs or PRSA AVCs

T

T&C

Guest
I am not familiar with alot of the terminology regarding pensions and financial products. I would appreciate some objective advice!

I began teaching at 20, and have seven years service completed (year one began Sept 2002).

I wish to be able to retire after 35 years service. As it is likely I may take career break at some stage, i will need to buy back years, as well as the five years to take me up to the full 40 years service. I currently have no financial commitments like mortgage or children!

I signed up for AVCs in Sept 2008 with Cornmarket. I did find their initial joining fee expensive. I had a consultation with them again in July 2009, and signed up for salary protection and life protection (is wasn't clear that the LP was an additional cost).

I had a consultation with a PRSA broker who adviced I should switch to a non-group scheme, which has less fees... a Zurich AVC policy. And I also switched salary protection. It means that the money is no longer taken at source, but rather by direct debit (with tax relief now included on my tax credits).

Both Cornmarket and the PRSA broker put forward various figures, but to be honest, eventhough I'm a whizz at Maths, each figure had possible variations and outcomes.

I think AVC is worthwhile, as is salary protection.

Is there anyone familiar with both who can advise me which is better value for money?

Thanks,
T&C (Terms and Conditions!)
 
Haven't looked at this for a couple of years but the Cornmarket charges used to be 5% off each contribution and 1% of the fund per annum; Zurich had the latter charge but 100% allocation of each contribution.

These fees may have changed and you should check.

If the differential is still there, it'd take a hell of a better investment performance by Irish Life to equalize the results.

The Cornmarket fee used to be not far off 4 figures from recollection but I think it's since fallen; in any event you've paid it now so it shouldn't be a part of your consideration.

Be careful of the PRSA broker's fees; plus, be aware that his/her advice is unlikely to be any more independent than Cornmarket's.
 
T&C,

The answer to your question depends on the contribution rates and annual management charges.

With the Cornmarket AVC you are likely to be charged a 4% contribution charge, a 1% annual management charge and of course the set-up fee of approximately €450 - €495 depending on when you started your policy (you will have received tax and PRSI relief on this as it is deducted at source as part of your contribution over the 1st year of the policy).

The contribution and annual management charge on the Zurich PRSA AVC will have been determined by your broker. It is highly unlikely that you have the 100% allocation rate that Oysterman mentions because you mention you had a consultation with the broker. Normally the 100% rate is used by execution only discount brokers who do not provide consultations (or by fee based advisers). Incidentally a 100% allocation rate is also available through Cornmarket on an execution only basis.

So without knowing what you are being charged on your Zurich product it is impossible to form an opinion. On top of this no one can forecast future performance so even though one might be better value than the other, it does not necessarily mean that your fund will be larger when the policy matures.

I'll declare a conflict of interest here as I am involved in this market myself.

On a separate note - specifically in your situation - should you take a career break you needn't necessarily require 35 years of service to retire early. You may retire with 33 or 34 years of service depending on how many years study/pre-teacher training you completed. When you are considering your break ask a broker to reassess your earliest possible retirement date based on the length of time you wish to take off.

Regards,
Andrew

http://www.squaremile.ie
 
Hi T&C,
Was in similar position to you a year or so ago, took out an AVC with Cnmkt after investigating a lot of other options. I opted to use them for the deduction from salary and I liked their investment strategies, a point not mentioned much! As for the Zurich policy it was 1% less per contribution, that's a choice you make on cost/convinience.

On the other hand the union salary protection scheme has far better benefits than a private arrangment, a quick look at the exclusions for teachers on private schemes as against the union scheme is interesting.

For me knowing an actual beneficiary of the union scheme who went from our staffroom was what made up my mind.

I suppose the fact that the teacher salary protection is running 20 odd years with thousands of members is comforting. Hope I never need it though!!

As for which is "better value for money" that's a personal choice on AVC's, but salary protection is always the best one you can afford.
 
It's interesting to note that since 2007, BillyM's only posts on Askaboutmoney have been about AVCs vs Notional Service Purchase, invariably leaning towards AVCs which is highly unusual. Quite a few of his posts are very positive about Cornmarket who only sell expensive AVCs and don't sell NSP. Draw your own conclusions.
 
Dave Vanian said:
It's interesting to note that since 2007, BillyM's only posts on Askaboutmoney have been about AVCs vs Notional Service Purchase, invariably leaning towards AVCs which is highly unusual. Quite a few of his posts are very positive about Cornmarket who only sell expensive AVCs and don't sell NSP. Draw your own conclusions.
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Hi Dave, I have not posted any negative's on the Notional scheme. Unfortunately for me I was precluded from availing of this option. Any posts I have made on this topic are my personal opinion or experience. I do read some of the posts on his site and in general find a lot of information useful.
I would be aware not to take any post as gospel and of course to be wary of "free advice". I would assume anyone who views any of these forums wouldn't actually act on the opinions posted here.
 
No connection, but have been a staff union steward. In this capacity I have had some experience of the salary protection scheme which is why I posted a reply to T&C.
 
Thanks for clarifying.

Could you ask your union why they appointed Cornmarket with its uncompetitive charges and seriously hard-sell tactics when there are far more competitive deals available?
 
Dave Vanian said:
Thanks for clarifying. Could you ask your union why they appointed Cornmarket with its uncompetitive charges and seriously hard-sell tactics when there are far more competitive deals available? I thought unions were supposed to work for the benefit of their members, not throw them to the wolves?
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You assumption is correct Dave, but you must bear in mind that far too many paid Union Officials aren't among the brightest stars in the firmament.

Just look at Doran for example! ;)
 
Would posters stick to the topic and discuss the merits/demerits of the TU sponsored Cornmarket schemes Vs other offerings.

Please refrain from speculating about the motives of posters. If you think the posting guidelines have been breached then use the report post to bring the matter to the attention of the moderators.
 
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