Another AVC Question....

S

sidzer

Registered User
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167
Hi all,

I am a 53yr old teacher and planning on retiring in 4 or 5 years age 57 or 58.

5 years ago I started an AVC with Zurich - I made 2 lump sum payments of 8,000 5 yrs ago - and then 10,000 4 years ago. fund is currently worth 22,500.

I then decided to go the NPS route and signed up to buy back the years that I would be missing at age 60 (approx 11 yrs).

I am currently paying 28% of my gross pay into my pension and can afford to do an AVC of 2% which would bring my pension contributions up to 30%. I will up this to 35% at age 55 - retirement.

I like the simplicity of going the Cornmarket route with deductions from gross salary - Zurich would be a lump sum payment at the end of the year and then making a tax return.

My question is - is this a simple issue of buying a similar good in 2 different shops? Or is it a foolish move not to stick with Zurich? ie.

Any opinions would be most welcome.

Thanks - Sidzer
 
sidzer said:
5 years ago I started an AVC with Zurich - I made 2 lump sum payments of 8,000 5 yrs ago - and then 10,000 4 years ago. fund is currently worth 22,500.
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€26k paid in and now it's only worth €22.5k?
What are all of the charges that apply?
And what is it invested in?
sidzer said:
I like the simplicity of going the Cornmarket route with deductions from gross salary
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Again, what charges apply and what investment options are available?
 
Sorry for not making it clearer. The 2 payments were 18,000 in total! It was invested in their Risk Level 5 fund - whatever that is I am not sure.

I think there is an annual charge of 1% with Zurich.

As far as know the charges for Cornmarket are higher but not exactly sure - but for me the convenience of deduction from work salary would make up for the differences.

My main question is that in theory is it a bad idea to have AVCs from different providers - Does this cause problems at the time of draw down in terms of fees / tax / flexibility etc.

Thanks CM
 
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Protocol said:
What broker did you use five years ago when starting the AVC with Zurich?
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I went directly with a Zurich Rep. Very nice person who wasn't at all pushey... I just phoned one of their lines and arranged a meeting in a hotel on the M1...
 
Okay. What you need to know is that this very likely did not save you any money.

Instead of a broker charging commission, that employee or agent gets a fee/commission.

Please read the documents carefully.

Twenty years ago, before I know what I know now, I went direct to the Hibernian insurance branch in Sligo, to cut out the middle-man broker.

What they didn't tell me was that the employee got 8% commission on all my pension contributions.

Please check all the fees you are being charged.

I bet you are being screwed by charges.
 
sidzer said:
I think there is an annual charge of 1% with Zurich.
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Are you absolutely sure that there was no other charge - e.g. a chunk of each contribution taken?
sidzer said:
As far as know the charges for Cornmarket are higher but not exactly sure - but for me the convenience of deduction from work salary would make up for the differences.
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The charges are very important. You need to clarify them on both the existing Zurich pension and the Cornmarket one. Incurring high charges for the sake of perceived or actual convenience could be shooting yourself in the foot.
sidzer said:
My main question is that in theory is it a bad idea to have AVCs from different providers - Does this cause problems at the time of draw down in terms of fees / tax / flexibility etc.
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All things being equal (in particular, charges being competitive) having different pensions can actually be a good thing as it can offer flexibility for retirement. E.g. retiring different pensions at different times rather than it being an all or nothing once off decision.
 
I had a look at the fees in each:

Zurich charged 2% on the 2 contributions I made and they have an annual management charge.

Cornmarket have a €595 signing up fee from gross pay - and an annual management charge of 1%.

Thanks - S
 
Okay, so by using the Zurich employee/agent, the contribution charge is 2% on the two lump-sums

8,000 * 2% = 160
10,000 * 2% = 200

You could have used an alternative broker where these fees are zero.

But, to be fair, if you felt the employee/agent delivered 360 euro worth of work/advice to you, then fair enough.
 
"My question is - is this a simple issue of buying a similar good in 2 different shops? Or is it a foolish move not to stick with Zurich? ie."

To answer your original question, yes, the same funds are sold through different channels.

  • You can buy the Zurich funds direct from a Zurich employee/agent, as you did, but this will not save you any money.
  • You can buy the same funds from a regular broker. Different brokers have different contribution charges.
  • You could use a discount broker, execution-only, no advice, where the contribution charge is zero.
 
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