AVC charges

Discussion in 'Pensions' started by POC, Mar 8, 2017.

  1. POC

    POC Frequent Poster

    I'm a public sector worker, already purchasing Notional Service. I want to start AVCs to maximise tax relief on pension contributions. I expect to use part of it to maximise my lump sum if/ when I retire early - and for the rest to go into an ARF.
    It sounds like the payroll dept already have arrangements in place for AVCs with New Ireland and Cornmarket (I'm a union member).
    What should I be expecting as AVC charges and fees? Will I be obliged to pay for expensive advice?
    I would really like the convenience of getting tax relief through my salary, rather than having to apply for it afterwards if I get a PRSA instead. But I would consider a PRSA if it is a better or more cost effective option.
    Any tips, or links to relevant information, would be greatly appreciated.
  2. Conan

    Conan Frequent Poster

    The benefit of availing of the "net pay" facility is worth something.
    In terms of AVC charges, they mainly fall into two categories:
    - the annual management charge: ideally you should be looking for a charge of 0.75% pa, but not more than 1% pa. Over time, the amc is the most important charge.
    - the upfront charge: this can vary up to 5% of each contribution, but mostly will tend to be circa 2%.

    Some providers will seek to charge a higher amc on the basis that they are sharing part with the advisor. The upfront charge tends to be source of paying commission to the advisor. Some products will have no upfront charge (ie 100% allocation) but with a higher amc, say 1% or 1.25%.

    Personally I would focus on getting the lowest possible amc.

    Ask the Advisor to clearly outline the charges.
  3. POC

    POC Frequent Poster

    That is very helpful thanks! Is there usually an initial set up fee as well?
  4. SBarrett

    SBarrett Frequent Poster

    If they are charging you a commission, you shouldn't be paying a set up fee!

    I think Cornmarket work on commission structures so expect there to be a premium charge ie for every €100 you contribute, €95 or €98 will be invested. I would bet the management fee would be 1%.

    If you want to have 100% of your money invested and a lower AMC, you will have to go outside the Cornmarket structures. That would mean claiming the tax relief on your premiums from the Revenue yourself.