Advise on Teacher's AVC with Cornmarket: Opt out? reduce to minimum?

Hi,

I am a 24 year old teacher working for 4 years now.

In my first year teaching a cornmarket representative arranged to meet me and advised me at the time to open an AVC accout and contribute about 70 euro / month (He did not mention at the time that there would be around 800 euro setup fee).

The following year another cornmarket rep persistently persued me to set up a meeting until I eventually agreed. This time he reccommended that I up my payment from 70 euro / month to 160 euro / month. After this meeting I was charged 500 euro without any indication that this would be the case.

Based on other theads on AskAboutMoney I now realise that the advise given was poor and biased & just wondering at this stage should I opt out of my AVC or should I just change the amount to the minimum?

I am not sure what the effect of opting out would be. I know there will probably be similar charges as above for changing to the minimum.

Sorry about the long post - hopefully other young teachers will avoid the pitfalls above.

Have a look at one of my previous posts: Re: A.V.C. -High cost startup?

My wife has dropped Cornmarket after being in the scheme for about 8 or 9 years. The Dept. are also charging 1% for collecting your AVC before passing it on to Woodchester.

btw, the reason he pushed for the meeting was so that he could catch you for the charge. I believe that you can now increase your payment, without advice, without any charge.

Q? Did you get value for your €500? In my experience of dealing with them directly, with my wife, their advice is general, vague and limited. My wifes current QFA gives specific advice and is the quality is light years ahead of Cornmarkets.

My advice: Drop Cornmarket, open your own PRSA AVC and, given the charges in relation to your level of contribution, I would query the matter with the pensions obmudsman. The charges, though Cornmarket standard, are disproportionately high in relation to your contribution and, I would say, on this alone, do NOT constitute good financial advice.

You now have €1920 deducted from salary, The Dept takes €19.20 off the top, you have a 5% contribution charge: €95.04, Woodchester have charged you €500, leaving you with a net contribution of €1305.76. If you assume that your fund grew by 10% (wife's fund NEVER grew by anything approaching that - didn't break even after 8 or 9 years!), then the annual management fee for the default fund will be approx €25.

So after 1 year, you will have paid €1920, total fees and charges will have been approx. €640 and your fund will be worth approx. €1400.

With the same return, and standard charges, your fund would be worth something around €1900+. Enough said!!

Thanks for the advise. On the question of value for money - I definitely didn't get value for money - at the time the Cornmarket representative met three of us from our scool at the same time (all of us out of college just over a year) and gave each of us the same advise i.e up the payment to 160 / month. He spent less than 15 minutes with each of us and offered what I would consider poor advise so €1500 for 45 minutes and poor advise not good value for money.

I work in the public sector. we had same problem with an expensive AVC supplier.

we brought in Eagle Star as a AVC PRSA provider, much cheaper and most staff have switched to them

ps: notional purchase is a better deal than AVC option

Bro123 said:

He spent less than 15 minutes with each of us and offered what I would consider poor advise so €1500 for 45 minutes and poor advise not good value for money.

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Have you make a complaint to cornmarket? If the three of you got on to them and stated how unhappy you are with the advice & charges and that you will raise the matter with the ombudsman if you don't get a satisfactory response from them you might have some luck.

Bro123 said:

After this meeting I was charged 500 euro without any indication that this would be the case.

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How long ago did this happen? I would imagine you have a case to recover at least part of this. The best possible spin I would put on this would be that it was misleading. Try taking it up with the ombudsman, and see what they recommend.

just check all douments to see if charges were disclose at point of sale..I would reccomend you put your complaint in writing to Cornmarket, and if you get no satisfaction from them contact the Financial regulator.Detais show be on your policy conditions. Keep a copy of all correspondence you send.

best of luck

I think you will find that the charges are all stated in the various documents, leaflets etc that you get from Cornmarket when you have your briefing. The problem, as I see it is that a) many of the charges are "hidden" in the small print b) the reps, in my experience (my wife was about 9 years with them and I was present at all meetings), are not up front about the charges when asked and, having sussed out the charges, I would say are intentionally evasive.

Bro123's experience graphically illustrates the problem with Cornmarket. They charged Bro 123 €500, having persuaded him to part with €1080 more. Think of the return Bro123 needs to recoup that level of charge!! He parted with €1080 extra but ended up with only €541 more invested! I think this type of selling is shameful! They did not say, and do not say, it will cost you €500 to do this. Bro123 could have said that he wanted to do it on an execution only basis and saved himself €500.

Cornmarket prey on people's naivety in not reading the small print. Most people do not do this [BIG mistake!!] and are caught. And...guess what!! The rep will be back next year, or the year after, for another small increase. I believe that the level of charge imposed on Bro123, given the increase in funding recommended, warrants, at a minimum, censure by the Pensions Board or Ombudsman.

Do cornmarket have an exclusive contract with teachers/public sector workers? Is there no competition available in that market?

Marathon Man is right about the fees and charges being stated in the numerous documents that go with it but from the Cornmarket Terms of Business state:

Fees and Charges
Prior to undertaking any business dealings on your behalf, we will discuss with you the charging structure which applies to the plan being recommended.

I contacted the INTO (by email) with my concerns, considering they are the ones endorsing Cornmarket and should be representing teachers, but as expected no reply.

From INTO website (http://www.into.ie/ROI/benefits/Cor...ditionalVoluntaryContributionsAVCs/#d.en.228)

"8,000 of your INTO colleagues already have an AVC! Your Cornmarket consultant will be happy to advise if an AVC makes sense for you."

I would like to see the stats around how many teachers cornmarket have advised not to go with an AVC. My guess from the threads on aam is that the % would be low and possibily 0 - regardless of age, stage in career, financial situation, etc the advise is the same for everyone.

I have sent an email of complaint to Cornmarket and also an equiry about how much it will cost to reduce payments/stop payments & I am waiting on a reply.

The most frustrating thing is it seems like nothing can be done about it.

webtax said:

Do cornmarket have an exclusive contract with teachers/public sector workers? Is there no competition available in that market?

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The Teaching unions have negotiated a deal/deals with Cornmarket. I have no idea what, if anything, they get in return.

In spite of the huge amount of criticism of Cornmarket on this site alone, I've never seen a defence of their position.

The good news is you can stop your AVC payments to Cornmarket and start your own stand alone PRSA AVC, through any of the regular financial providers - my wife has done this.

Advantages include;
Decent advice,
Elimination of Dept of Ed's 1% collection charge
Fees are limited to 5% of contributions (you can get lower fees - wife pays 3%) and 1% annual management fee (Cornmarket default is 1.75%)
Growth possibilities are generally better (apart from current market gloom that is! <wry grin> ).

Disadvantages;
You must claim back the tax & PRSI - you don't get the relief at source. You can claim the tax relief on-line, if you're registered for PAYE Self-service (for employees). You have to claim back the PRSI at the end of the year. The upshot of this is that the first few months are the hardest to bear financially - because you're shelling out gross and don't get the relief until later.
AVCs in the Woodchester system must remain there, but they still (I hope) go on increasing in value (I'm not holding my breath!)

Bro123:

I have sent an email of complaint to Cornmarket and also an equiry about how much it will cost to reduce payments/stop payments & I am waiting on a reply.

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If you tell them to change it [either up or down], on an execution only basis, it will cost you nothing. If you want to stop payments, it will cost you nothing either but you must notify Cornmarket and the Dept. Payroll section in writing.

My advice is to get out of Cornmarket and open your own PRSA AVC. If the disadvantages outlined above cause you a short term problem, then start with a lower payment until you get your rebate from the revenue, then up it.

Bro123 said:

The most frustrating thing is it seems like nothing can be done about it.

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I wouldn't take what happened that easily. I usually find that if you make it clear that you are not going to stop complaining until you get some satisfaction you will get something out of it. Contact the rep, his manager, INTO and the ombudsman if necessary and don't take any brush-offs. Keep a written record of all correspondence. At the least you will end up with cornmarket being the ones pi**ed off and not you.
From your OP you have a case for getting some if not all your money back - a rep giving you bad advice to line his own pocket is disgraceful and if a few people make the same complaint about him he won't last long in his job - you will probably save someone else going through your problem.

BTW you can be sure that INTO are getting plenty out of the deal with cornmarket - time for some competiton!

is it better if possible to buy years of notional service, this wud be index linked..it may be more expensive though.

does the 750 charge apply still if u opt out after 1 year?

can the avc payments be transferred to notional years of srervice.

does anyone know how to go about paying/setting up notional years service?