4 pension companies coming to our company what do I ask them?

Hi

1. Mercer pension consultants
2. Bank of Ireland Asset Mgmt
3. Irish Life Investment Mgrs
4. Standard Life Investments

are coming to our company soon to pitch for our pensions. What should I ask them which will help me choose which to go with?

Management fee, plan charges per annum, bid/offer spread. Anything else I have been told the International Equities for BoI has been under performing. I was going to go with 100% equities given its prospect of good performance over the long term. Any ideas guys they each have varied plans of different risks. I was all set for 100% risk in international equites but when I heard they were under performing I am now not sure. Is there anything I can ask that would make my mind up I want to know if they have plan charges as I know the management fee is 0.75% for equity based one and 0% bid offer spread.

If you are not retiring for several years yet then 100% equities might be worth considering alright. I don't really know what you mean by "under performing" but remember that past performance is no guide to future returns and it's pointless looking at recent short term performance of pension funds when figuring out the most appropriate fund to select. Check what other charges (if any) in addtion to the annual management charge apply (e.g. monthly policy fee, allocation rate, commissions etc.).

Maybe ask them how well their active funds have done versus passively investing in an index fund.

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Ask about Eagle Star!

Things to mention: allocation rate ( i.e. how much is invested) can vary from 100% to 105.25% of 95%; bid offer spread; policy charge; management fee; fund choices; performance

Ask them if they have any research that shows that active fund management beats passive index tracking in the long run. Ask Mercer why they aren't offering you a low cost pure index tracking facility (and the IL concensus fund isn't a real tracker).

Personally, I don't see why you would want to invest in an index tracker and thereby forego all dividend income.

European equities are your best bet for the moment, I reckon. Bank of Ireland Investment Managers have had a lot of senior staff turnover recently and this has resulted in underperformance and the loss of a lot of investment mandates to the company. However, their chief investment officer remains in place and I would still expect them to be a quality performer over the medium term. They tend not follow the herd.

The issue of the administration charges are queries to be put to Mercer. Annual fund management fees, bid/offer spread queries should be addressed to the investment managers. Also consider spreading your fund across the managers.

Friday said:

Personally, I don't see why you would want to invest in an index tracker and thereby forego all dividend income.

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Index trackers don't forego dividend income. You could be thinking of tracker bonds - which are a different animal all together.

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THe options and fees that you outline are fairly similar to those that I experienced in my last job (US multi-national), though we didn't have any DB element to the pension. One general point you should think about is your overall financial position. I wouldn't recommend putting extra contributions into your DC scheme if you're going to be struggling to get a house deposit together in a few years time, or if you are carrying high-interest debts (e.g. credit card).

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