Current Public servant - what to do with old private pension

Northie

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Apologies for the long post

I currently work in the civil service (since 2008) and for a good portion of this I would have been on a reduced pattern to manage life/work balance. I've recently returned full time. I am now 39.

I previously worked for an American Multinational with a private pension. Left there in 2003 following redundancy. I had put the issue of the private pension to the back of my mind, always meaning to go back and look at it.

Anyway, have recently received a letter from Invesco who are the trustees of the private plan. My previous employer has decided to cease contributions to the plan so the trustees have resolved to wind up the plan.

There are a number of options open to me:

1. Transfer my retirement account to a new employer arrangement
Am I right to assume that this is not an option as my current employer is the civil service

2. Transfer 100% of the value to a Personal Retirement Bond (PRB) of my choice

3. Transfer 100% of the value to a PRSA of my choice

4. Default option if I do nothing: Trustees will invest the value into a selected PRB with Irish Life.

The current value of my account is: €17,345 with just less then 3 years in the scheme.

Details of the Irish Life PRB (Personal Lifestyle Strategy):
1. No entry/exit fee
2. No monthly contract charges
3. No commissions payable
4. 100% of my fund gets invested
5. Competitive annual management charge of 0.35%pa

As I was a late-ish entrant to the Civil Service (at 31) and worked for a number of years on part-time hours it was already at the back of my mind that I would need to look at adding to my pension.

Am I better parking this amount in a PRB and separately dealing with buying years/AVCs to go along with my civil service pension or looking at moving this fund into a PRSA that I could then add to?

There is obviously a deadline from Invesco of the 12th August at which time if I haven't responded they will select option 4 for me.

If anyone could give me some pointers to start with to, I would be grateful.
 
The brochure from Irish Life that came with the Invesco letter calls it the "Personal Lifestyle Strategy"

The investment funds used in the PLS are given as:
1. Tax free cash fund
2. Pension Stability Fund
3. Pension for Life Fund
4. Consensus Plus Fund

They outline a two phase approach:
Phase 1: puts you in funds suitable to achieve investment growth while at the same time balancing investment risk. Initially you will be completely invested in a growth fund, typically the Consensus Plus Fund. With 20 years to retirement we start to gradually move your fund into the Pension Stability Fund. This helps to protect your PRB fund against volatile markets.

Phase 2: moves your PRB fund into funds that will be most suitable for how you will use your PRB savings uipon reaching retirement. Typically a PRB holder will use 80% of their fund for a Tax free lump sum with the remainder used to purchase an annuity. With 1 year to retirement you will be 80% invested in the Tax free cash fund and 20% in the Pension for Life Fund.
 
The PRB looks really favourable! If you know you will retire in Ireland go for that one. If you consider retiring abroad consider a cheap PRSA.
 
Phase 1 above is known as life styling and is common place. Phase two above does not sound correct at all as you only have three years service you are only entitled to 25% tax free. if your fund is €17345 then your tax free lump sum will be €4336 with the remainder going to an AMRF to age 75if you do not have a guaranteed pension income of €12700 per annum.

The charges on tat offer from Irish Life are execellent but the returns on those funds are not great. You will gain on the annual charge but loose overall on the potential gains from better performing funds that are available.

If you want further more specific details Alan Considine QFA 086 22 22 204
 
Alan,
The charges on tat offer from Irish Life are execellent but the returns on those funds are not great. You will gain on the annual charge but loose overall on the potential gains from better performing funds that are available.
Not sure how you can say that he will "but loose overall on the potential gains from better performing funds". To me that sounds like predicting the future. How do you know what will turn out to be better performing funds? The lower charges are a certainty, but "potential gains" are only that - potential.
Since Northie has some 25 years plus to retirement, a low fund charge of 0.35% represents a saving of circa 0.5% p.a. on typical fund charges. So any return will be enhanced by c0.5% p.a. - which will be significant over 25 years.
With such a long time to retirement I would certainly favour the fund with the more aggressive investment strategy, at least for the next 15 years or so. One can then move to a more conservative strategy nearer to retirement.
 
Conan, The funds he is suggesting are NOT more "aggressive" - the typical AMC is NOT .85%, Conan, you should not be giving advice unless you are qualified to do so. If you compare 10 years past performance it gives a good indicator as to the performance of the managers and the individual stocks held. The fund I would suggest has 30 years performance history. If all you are concerned about is low charges best of luck.
 
The average person is best served with very low charges and a fund which tracks the stockmarket (e.g. Vanguard ETF). I didn't checked the avialanble funds which are available to OP - would go most likely with the one which has mostly equities.
 
Conan, The funds he is suggesting are NOT more "aggressive" - the typical AMC is NOT .85%

What would you suggest is a typical AMC for a PRB? I wouldn't have thought it would be much lower than 0.85% for a 100% allocation rate.

Strongly agree with Conan that past performance is not a predictor of future results. If anything, strong performance in the past is probably predictive of a period of future underperformance as the manager/strategy reverts to mean.

In any event, Irish Life's Consensus Plus Fund is passively managed and is over 70% invested in growth assets (equities and property). While it's not particularly aggressive, it certainly doesn't seem overly conservative to me for a 39 year old.

Does somebody who can took forward to a civil service pension in the future really need to shoot the lights out on the performance front?
 
Conan, The funds he is suggesting are NOT more "aggressive" - the typical AMC is NOT .85%, Conan, you should not be giving advice unless you are qualified to do so. If you compare 10 years past performance it gives a good indicator as to the performance of the managers and the individual stocks held. The fund I would suggest has 30 years performance history. If all you are concerned about is low charges best of luck.
Alan,
Having worked at Board level in the Pension Funds business (including client advisory) for over 30 years I believe I am very well qualified to give advice. Furthermore I am not on this site seeking to generate business (just giving posters the benefit of my considerable experience).
When I said that the "typical" AMC is c0.85% I was being conservative. As you know (I hope) AMCs can range from 0.75% to over 2%. Past performance is just that - past. Yes it might be of some value as an indicator, but a saving of 0.5% in AMC is real.
So what you need to consider is whether a guaranteed saving of 0.5% p.a. in AMC is worth forgoing for a potentially higher return - which is not guaranteed. I just think that is worthy of consideration.
 
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