Advice regarding an opening AVC

[PhilMarlowe]

Hi everyone,

I am pretty lost with this all and hopefully someone here can help me.

My details are as follows:
Age 45
Salary: €56 721
Employed at a cultural heritage institution

I've been a part of the single pensions scheme since 2017 and now want to start adding to my pension. Unfortunately, thanks to some strange wrangling by our union we only have access to one provider to do it at source and their charges are high and, I feel, dishonestly applied, so I don't want to go with them. So, I'm looking at one of two options I guess:

1. An activation only AVC

• I have no real idea how to choose the funds or how I would make changes to the AVC, e.g. increasing premiums etc, once it is set up...

2. Get an AVC through a broker

• I know I'll have to pay higher fees, I'm not averse to it, but after my experience with the union appointed provider I feel a bit distrustful of brokers. If anyone could recommend one I'd appreciate it.

Lastly, since I'm not going with the union appointed provider will I need to be claiming back tax at the end of the year? Or is there a better way of doing it?

Thanks everyone!

 

[ClubMan]

1. An activation only AVC

I presume you mean an execution only AVC (PRSA?) meaning that you tell them what you want and they set it up for you?

I have no real idea how to choose the funds or how I would make changes to the AVC, e.g. increasing premiums etc, once it is set up...

So you probably need advice in which case you can go with an advisory broker who will advise you and guide you through the process for a fee.

Lastly, since I'm not going with the union appointed provider will I need to be claiming back tax at the end of the year? Or is there a better way of doing it?

If you don't go with the appointed provider (Cornmarket?) then you won't get tax relief via payroll and will have to claim this yourself via your Revenue myAccount.

There are lots of existing threads/posts on this topics that you might want to search for and review to understand matters better.

 

[Saturn]

Lastly, since I'm not going with the union appointed provider will I need to be claiming back tax at the end of the year? Or is there a better way of doing it?

After you take out the AVC you will get a form from the broker/provider. You will need to provide this to Revenue for your tax relief in any event . You can get the contribution coded into your annual tax credits and it is then applied to your salary. So your net fortnightly pay should be the same as if you were doing it by salary deduction. You do this yourself via MyAccount.

 

[cremeegg]

I have no real idea how to choose the funds

In my opinion this is a non issue for the ordinary person. Buy any fund from a large well known provider mostly exposed to world equities.

This is like advising you to buy a Volkswagen. Unless you needed a Ferrari, or a tractor, it's sound advice. Would you be better off in a Ford, or a Fiat, ? Of course not, it makes no difference.

 

[cremeegg]

how I would make changes to the AVC

I have an exceution only broker. The way I make changes is I ring him up and I say, I want to pay XX euro now, and he says OK.

Note he does not check that this is within my NRE (the amount I can get a tax deduction on), I have to know that myself.

I could also make changes to the funds online through the Pension providers website, if I suddenly thought I needed to change my VW for a Toyota.

 

[PhilMarlowe]

After you take out the AVC you will get a form from the broker/provider. You will need to provide this to Revenue for your tax relief in any event . You can get the contribution coded into your annual tax credits and it is then applied to your salary. So your net fortnightly pay should be the same as if you were doing it by salary deduction. You do this yourself via MyAccount.

Thanks Saturn, that's great to know.

I presume you mean an execution only AVC (PRSA?) meaning that you tell them what you want and they set it up for you?

That is what I meant. Sorry, got the terms mixed up.

There are lots of existing threads/posts on this topics that you might want to search for and review to understand matters better.

For what it is worth, I have read a lot of threads on here but I've found a lot of stuff contradictory. So I thought I'd ask.

In my opinion this is a non issue for the ordinary person. Buy any fund from a large well known provider mostly exposed to world equities.

This is like advising you to buy a Volkswagen. Unless you needed a Ferrari, or a tractor, it's sound advice. Would you be better off in a Ford, or a Fiat, ? Of course not, it makes no difference.

Thanks Cremeegg, I should have phrased it better. I'm not asking what to invest in but how does the process work? I've been looking at the list of funds provided by an institution such as Zurich and there is a section of funds that are valid for a PRSA, am I able to choose any from this list and then ask the execution only provider to send me that documentation? How many funds can (should) I choose to invest in?

It is these types of questions that I'm unsure about. And probably why it would be best for me to go with a broker but I thought I'd investigate execution only as an option. Also, as I mentioned in my previous post, any advice on a good broker would be appreciated.

I have an exceution only broker. The way I make changes is I ring him up and I say, I want to pay XX euro now, and he says OK.

Note he does not check that this is within my NRE (the amount I can get a tax deduction on), I have to know that myself.

This is good to know. For some reason I assumed that execution only meant that they wouldn't do this type of admin for you. As far as the details such the tax free amounts etc I can keep an eye on that myself. I doubt I'd be getting close to it anyway.

 

[ClubMan]

For what it is worth, I have read a lot of threads on here but I've found a lot of stuff contradictory.

Like what?

 

[Fortune]

assumed that execution only meant that they wouldn't do this type of admin for you.

There's no need to involve a broker in this, regardless of whether or not they're execution only. Just contact the provider and tell them to switch funds or change the payments.

 

[GSheehy]

I've been looking at the list of funds provided by an institution such as Zurich and there is a section of funds that are valid for a PRSA, am I able to choose any from this list and then ask the execution only provider to send me that documentation? How many funds can (should) I choose to invest in?

If you scroll dow to page 4 you'll see the PRSA funds available for Standard & Non-Standard PRSAs. So, the funds an available depends on the product you choose to buy.

Why do you think you should choose multiple funds?


Gerard

www.execution-only.ie

 

[PhilMarlowe]

Like what?

Maybe not contradictory but in the replies here you have said:

If you don't go with the appointed provider (Cornmarket?) then you won't get tax relief via payroll and will have to claim this yourself via your Revenue myAccount.

and then somebody later advised:

After you take out the AVC you will get a form from the broker/provider. You will need to provide this to Revenue for your tax relief in any event . You can get the contribution coded into your annual tax credits and it is then applied to your salary. So your net fortnightly pay should be the same as if you were doing it by salary deduction. You do this yourself via MyAccount.

To you this probably isn't contradictory but to me that's competing information and I'm glad that I asked the question.

There's no need to involve a broker in this, regardless of whether or not they're execution only. Just contact the provider and tell them to switch funds or change the payments.

When moving house recently I tried to modify or cancel a number of policies and was told repeatedly that I could only do this through the broker who set them up. I thought that this would apply here as well.

Why do you think you should choose multiple funds?

I have a few investments that were set up by brokers and all of them are in at least 3 different funds, I assume for diversification. I just assumed that I should do similar here.

 

[ClubMan]

To you this probably isn't contradictory but to me that's competing information and I'm glad that I asked the question.

It's not contradictory.

 

[ClubMan]

When moving house recently I tried to modify or cancel a number of policies and was told repeatedly that I could only do this through the broker who set them up. I thought that this would apply here as well.

What kind of policies?

 

[ClubMan]

I have a few investments that were set up by brokers and all of them are in at least 3 different funds, I assume for diversification. I just assumed that I should do similar here.

Many or most funds already offer adequate diversification within the fund. Investing in multiple funds may actually dilute diversification.

 

[Protocol]

I am pretty lost with this all and hopefully someone here can help me.

My details are as follows:
Age 45
Salary: €56 721
Employed at a cultural heritage institution

If you are sure of the following

(1) you are sure that you want to enhance your pension
(2) you are sure that an AVC is the best way to enhance your pension
(3) you don't want to use the broker / lifeco that offers salary deduction
(4) you know (broadly) want fund(s) you want to save into

Using an EO broker is fairly easy, as there are so few of them in Ireland.

I know of just two, I have never spoken or met either of them, but I would recommend them: www.prsa.ie in Cahir and LA Brokers in Greystones.

I suggest you look at their websites, and look at the menu of funds.

 

[S class]

Some General Mistakes That (potential) Execution Only Customers Make

Not knowing the difference between a Standard PRSA and a Non-Standard PRSA Not knowing the difference between a PRSA and an AVC PRSA Not knowing that you can't transfer an occupational pension scheme or AVC of €10K or more to a PRSA / PRSA AVC without a CoBC Valuing your own time but not anyone...

www.askaboutmoney.com

This is a brief description of how to open your pension account using an execution only broker.

The list of possible funds you can choose from will be included in the documents that will be sent alongside the application forms. The type and risk level of each fund is described in the literature.

There is a choice of funds section on the application forms.
You decide what funds to invest in.
This can be 100% in one fund or split into more than one fund.

 

[PhilMarlowe]

What kind of policies?

Clubman, I gotta ask, what is going on here? You're coming across as pretty adversarial and I'm not loving it. If you're annoyed by someone asking for, admittedly, basic financial advice then maybe don't engage.

I suggest you look at their websites, and look at the menu of funds.

Thanks Protocol. I had previously looked at one of these websites and was put off when they asked for 'exact' products since I didn't know the exact product I wanted. The other website was a bit more user friendly and has answered a lot of my questions but, honestly, I think a broker is the way for me.

 

[Protocol]

Yes, using an EO broker means you must choose which funds to save into.

Each lifeco has a menu of funds.

You have to read the menu, and choose the most suitable fund(s).

 

[ClubMan]

Clubman, I gotta ask, what is going on here? You're coming across as pretty adversarial and I'm not loving it. If you're annoyed by someone asking for, admittedly, basic financial advice then maybe don't engage.

You mentioned other policies, I presumed for a reason. I was trying to see if/how they relate to your pension plans. I won't give you any further useful feedback if that's what you prefer.

 

[PhilMarlowe]

You mentioned other policies, I presumed for a reason. I was trying to see if/how they relate to your pension plans.

If I got the wrong end of the stick, I apologise. As I mentioned in the original post, the policies were house related, i.e. insurance and mortgage protection. So, not pension related but since they were through financial providers, one of which is now an AVC provider, I made the leap that they would approach brokers similarly.

 

[GSheehy]

I had previously looked at one of these websites and was put off when they asked for 'exact' products since I didn't know the exact product I wanted

There are 8 'pension' products available on the website, 4 of them are PRSAs. If someone submits a request for information on a 'pension' then that's a good indicator that they're not suitable for an execution only service.

At least, not until they do a hell of a lot more research anyway.