ARF charges

Running Hatter said:
I will be retiring early (59 yrs) in the next 18 month's and plan to go down the ARF route and of course I will be getting professional advice.
I plan to take 25% lump sum and go with a 75% passive global equity and 25% cash mix with the remainder.
My question is which company has the lowest overall charges and what percentage should I expect to pay.
Click to expand...
Hello Running
I plan to retire early next June at 59 so very similar to yourself. At this stage I plan to go 90% passive global equity and 10% cash fund (with either royal london or Zurich) using cash cash fund for withdrawals. I'm torn between EO only or broker with advice. Could I ask you what you did and which broker you went with.
I hope you're enjoying your retirement.....I can't wait to step off this work treadmill and working shift is another incentive to get out
Best regards
Phil
 
Is moving DC funds to a PRSA/S an option for lower charges, or does that bring on more charges?
 
The cost of the certificate of benefits comparison (COBC) is an issue, however we have experience with a couple of life companies who will cover the cost of the COBC if the PRSA meets a certain size and the client has long enough to go to their normal retirement age (NRA) . So if the PRSA is substantial and you have 5 years or more to your NRA, then the cost of the COBC should not be a deterrent. The life companies we use have competitive costs and good investment choices/performance so them covering the COBC cost is not the only consideration when using them.
PRSAs have several inherent advantages so its good that the COBC costs can be dealt with.
 
ClubMan said:
What's considered "substantial"?
Click to expand...
In our experience once the PRSA is over €200k then we can get the COBC costs covered unless the person is very close to NRA i.e. needs to be 4 or 5 years to their NRA,,, though somewhat confusingly, with PRSAs you can change the NRA and there are no early exit charges. We don't like to take advantage by having the COBC cost covered and then the client retires soon after.
 
Curious as to why years to the NRA would matter? Is the covering of the COBC made up some other way? Sorry, just when you see all the various charges here, you get cynical. Am I right in thinking the ARF charges simply remain the same on retirement? I recall that under the new pension rules, the same option is available for occupational pensions now or soon also? So moving to ARF may be less common and actually avoidable?
 
mmclo said:
Curious as to why years to the NRA would matter? Is the covering of the COBC made up some other way?
Click to expand...
I presume that they need a certain number of years of AMC and/or (trail) commission to make it pay?
mmclo said:
Am I right in thinking the ARF charges simply remain the same on retirement?
Click to expand...
You can shop around for the best deal on charges when it comes to buying an ARF. You don't have to stay with the same pension provider.
 
I was thinking also about "in-scheme drawdown", although I think it hasn't been introduced. Hard to say how the fees would work on that, but it would be a hard sell to increase the actual fees during the contributing phase.
 
mmclo said:
I was thinking also about "in-scheme drawdown", although I think it hasn't been introduced.
Click to expand...
I don't think that it has been.


mmclo said:
but it would be a hard sell to increase the actual fees during the contributing phase.
Click to expand...
I don't understand this point.

For what it's worth, in-scheme drawdown is effectively possible with a PRSA by converting it to a vested PRSA when one wants to take pension benefits (tax free lump sum and ongoing income).
 
Yes, I was reading the other thread. I would have thought moving from occupational to PRSA's would generate a lot of fees too. The in-scheme drawdown sounds very attractive; I can wait about 5 years, so hopefully no longer!
 
mmclo said:
I would have thought moving from occupational to PRSA's would generate a lot of fees too.
Click to expand...
It may require a certificate of benefits comparison but some pension providers may cover the cost of this (a couple of grand maybe) in certain circumstances. But I'm but necessarily suggesting that you should transfer/merge your pensions into a PRSA in case you got that impression. I was just pointing out that in-scheme drawdown is effectively possible using a vested PRSA. On the other hand, in some cases buying an ARF with a PRSA (after taking the tax free lump sum) could yield even lower charges than the vested PRSA.
 
I will post my question here or can open new thread if that is better?
Thanks to all the contributors for the insights available on the site.
I have read a number of the other threads re ARFs which have been very helpful and I would like to outline my intentions and ask for your feedback.

I am nearly 60, about to retire and have a pension fund to invest in an ARF. I will take the 25% tax free lump sum
I want to invest 100% in a fund investing in an ETF tracking the MSCI World Equity index. This is no change to the current allocation in my pension fund.
I will look for an execution only service from a broker/intermediary.
I will draw down funds each year to 1) use tax free allowances and 2) avail of 20% income tax band and 3) get class S PRSI stamps.
I will use the tax free lump-sum and other savings to cover additional living expenses.

My aim is to minimize total costs of the ARF and there is lots of advice in other threads about how to do this.

Which funds to invest in?
I have researched insurance company performance for funds invested in World Equity ETFs:

1. Royal London Blackrock Developed World Equity Index Fund - @ 3rd Sept 2026
72.47% cumulative 5-year growth
(0% AMC noted in fund information)
Why is return higher than underlying fund?

2. Zurich Indexed Global Equity (Blackrock) - @ 6th Sep 2026
69.1% cumulative 5 year growth
(I could not find much AMC information. Annual management charges (AMC) apply. The fund performance shown is before the full AMC is applied on your policy)

3. Standard Life Vanguard Global Stock Index - @4th Sept 2026
66.7% cumulative 5 year growth
(.9% AMC noted in fund information)

Irish Life and Aviva don't seem to offer similar funds to the above.

Are there any other Insurance companies that I should look at?

and the underlying ETF performance:
1. Vanguard Global Stock Index Fund USD Acc (VANGISI) - @ 4th Sep 2026
68.6% cumulative 5 year growth in USD (+ approx. 2.3% EURO appreciation) = 70.9% cumulative 5 year growth in EURO

2. Blackrock iShare Developed World Index Fund - @4th Sep 2026
69.4% cumulative 5 year growth in USD (+ approx. 2.3% EURO appreciation) = 71.7% cumulative 5 year growth in EURO

Conclusion - Go with Royal London. They have 0% additional AMC on the fund which allows the fund performance to get very close to the underlying Blackrock ETF performance

Which intermediary/broker to use?

The lowest prices that I have seen for Royal London is execution-only.ie
(from their website)
AMC is 0.60% (including intermediary renumeration) on 8 Index Funds
Lower AMCs available depending on age, value and accepting early encashment charges
Are there any better options?

My pension provider requires that I need independent financial advice before I can open an ARF?
Any recommendations for a financial adviser please?

Thanks for any comments to fill in gaps and anything that I have misunderstood or omitted.
 
I went execution only on a Zurich ARF.
Recently I had a look at RL returns and also impressive and they have been contributing an annual bonus (not guaranteed).

A guide I’ve come across is that past performance doesn’t necessarily mean a huge amount unless they have a consistently poor return in which case the probability of a near future relatively good return isn’t great.

Do your homework on funds taking into account your toleration for volatility risk, sequence of return risk and include your other assets and plans for retirement.
I’m currently 70% equities in my ARF with sequence of return plan incorporated.
Missing out on some gain but allows me to sleep well (apart from 3 visits to the bathroom)
I’m 68 year old male.

Loads of tools in the broker sections of web sites.

When you settle on exactly what you want ( took me months ) , contact execution only brokers and get a quote and terms.
Amount to be invested has impact on terms.

I ended up with Gerard Sheehy execution-only.ie

I found the process easy.

Keep an eye as to when you settle on what date you set up ARF (after Nov. 30th) in relation to imputed distribution and tax band for first year’s distribution.
I chose annual distribution and so first drawdown twelve months later but had TFLS year before that.
May be an option that suits.

That’s my journey in a nutshell so far.

I hope it helps.
 
Deauville said:
A guide I’ve come across is that past performance doesn’t necessarily mean a huge amount unless they have a consistently poor return in which case the probability of a near future relatively good return isn’t great.
Click to expand...
If you choose a low charges diversified passive index tracker (e.g. MSCI World Index based) then you get the performance of the index less whatever charges and tracking error apply and you're not relying on an active manager's skill in choosing winning stocks.
 
You must log in or register to reply here.
Back
Top