Additional PRSA AVC Group Scheme with New Ireland: are the charges excessive?

G

gabhla

Guest
Hi,

I'm employed by a state body for the last 4 years, I've bought back as many years of service as I could and now wish to take out an additional PRSA AVC.

The group scheme, with NEW IRELAND,which would be deducted from my salary has the following charges:

24.54% in the first year.

2.75% first 10years of policy
0.75% after 10years of policy.

I intend putting in about €3,500 in year 1, increasing it every year,and retiring at 60 if possible, 42 now.

what I would like to know,
are the charges excessive?
would I be better taking out a low cost standard PRSA AVC, and claiming back the PAYE/PRSI myself.

Many Thanks
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

gabhla said:
24.54% in the first year.
2.75% first 10years of policy
Click to expand...
Do these percentages refer to the amount of each contribution that is taken in charges? If so what is the annual management fee which will also be charged?
are the charges excessive?

would I be better taking out a low cost standard PRSA AVC, and claiming back the PAYE/PRSI myself.
Click to expand...
I certainly think so. Those charges seem absolutely shocking!! Especially when you can get Standard PRSAs with no per contribution charges and just a 1% annual management charge for a once off arrangement fee of a few hundred euros. There are several threads dealing with this already. :eek:
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

Thanks

the management fee is 2.75%, pa for the 1st 10years, then .75%pa.
other fees:
Policy fee €3.49per month
also the Renewal investment Premium is 99.96%

however, after 10 years in the scheme New Ireland will take the ACCUMULATED fund and apply a 5% bonus to the entire amount.
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

So in year one you pay 2.75% annual management charge as well as 24.54% of each contribution? The first decade annual management charge is very high. The year one per contribution charge is outrageous. The charges are very confusing and you never mentioned the year 10 bonus. I don't understand what the renewal investment premium of 99.96% means. I don't like convoluted charging structures and would tend to avoid them. 0% on each contribution and 1% annual management charge and no other chanrges of convolutions I can understand. Whether or not this would be better in the long run depends - you would need to crunch the numbers to check. The 5% bonus after 10 years may not make up for the excessive charges over that period compared to a lower charging fund. Note that most or all PRSAs don't charge a monthly policy fee.
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

You can open a PRSA AVC of your choice, rather than the group scheme. Scheme charges are limited by law to 5% of contributions and 1% annual management fee, for standard PRSAs. There are several schemes that have lesser charges.

My wife (teacher) recently changed from the ASTI scheme and opened her own PRSA AVC. The Cornmarket AVC charges are exorbitant. Another bonus of the non-group AVCs is that you can choose a scheme that better siuts your individual preferences.

One thing to be clear on - you are NOT limited to your employer's PRSA! A drawback of the private PRSA is that you must claim back the PRSI as it can't be allowed for at source.

Hope this helps. My advice: go for it - get your own PRSA!
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

Don't put any money in that New Ireland scheme you describe! Charges are beyond excessive the should be criminalised.
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

Once I got beyond the shock of the charges and read the rest of the post another thing strikes me. If you invest €3,500 and assuming +5% each year for 18 years and assuming you go for a standard PRSA with 5% upfront and 1% annual charge and achieve 6% growth then you would have a fund of around €140k at retirement aged 60. Lets also assume annunity rates are 5% when you retire, then you will get an annual pension of €7,000 gross.

What is your defination of retire at 60 "if possible"? Make sure you have no unreasonable expectations of what size of a fund you will achieve by 60.
 
Re: Additional PRSA AVC Group Scheme: are the charges excessive?

thanks for your comments.
The initial policy documents from New Ireland, said that only 54% of the first year's premium would be invested.
However after querying this with the broker, I was told it was a mistake, and it should have been 76%.
The new policy says nothing about the 5% bonus after ten years, mentioned by the broker,
which I have requested written confirmation from New Ireland.
Finding the full extant of the charges has been a difficult task, but one way or the other, I won't be going ahead with this policy.
It was mainly the convenience of it which appealed, the deductions from salary etc.
 
Have you had confirmation from New Ireland. Sorry just realised how old this post is. Forget I asked the question. The only reason I did is that I too am invested in a PRSA.
 
Last edited:
I know this post is getting on a bit but the best way is to agree a fee upfront which covers the set up and then the only charge is the 1% management fee.
H
 
You must log in or register to reply here.
Back
Top