AVC:husband Local Authority with Marsh: wife nurse with Cornmarket; charges etc?

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limerickmick

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I am working for local authority and my wife is a nurse.

I am in an AVC scheme with Marsh for the last 2 years and the value of my funds are less than my contributions - the charges seem huge, e.g Marsh charge 5%, Irish life charge 5% of each contribution, annual charge of 1.65% and an admin charge of 3.09 for every contribution which i pay fortnightly!

My wife is due to commence an AVC scheme and cornmarket are charging commisssion of 865 euros initially prior to other charges.

I would appreciate any advice as to our best option given that we will both be short circa 7 years on retirement.

I appreciate anybody taking the time to respond.
 
limerickmick,

What are Marsh & Cornmarket saying about the charges?

Is it a 'take it or leave it' scenario or are there other options available from them?
 
limerickmick said:
My wife is due to commence an AVC scheme and cornmarket are charging commisssion of 865 euros initially prior to other charges.
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What's to prevent her taking out a PRSA with no commission on contributions and an annual 1% charge with a very small set-up fee rather than Cornmarket's huge set-up fee, 5% on contributions and c.1.5% annual fee?
 
As far as I know, Cornmarket will reduce the commission by 1/2 on an execution only i.e. without all the other advice.

My wife needed advice about buying back years etc, so she decided to go for the higher commission option to sort this out.
 
On an execution only basis Cornmarket charge no fee. Only charges are the ongoing admin charges, typically 5% contribution (bid/offer) charge and 1% annual management charge.
 
I struggle to reconcile 'no fee' with '5% contribution (bid/offer) charge and 1% annual management charge'.

Casey - Do you have any vested interest in this issue?
 
I have an AVC with Cornmarket - buying back years. Last year I increased my subscription and it cost me over 460euro approx. and as far as I am aware Cornmarket charge 865euro to new subscribers. Also, there is a fee of eleven euro sixty cent being deducted from my salary every two weeks. Up to a month ago that fee was just over six euro - almost double, so I would not agree with Casey above.
 
Are people (Local Authoriy, Nurses, Teachers) who have an AVC facility as part of their Occupational pension scheme entitled to open a PRSA?

Im thinking of people who whould have no outside income and people who would be prepared to make contributions outside payroll and manually claim back PAYE and PRSI.

The pensions board website is not very clear the issue.
 
afaik you may only contribute to a PRSA as opposed to an AVC plan, when your employer arrangement does not faciliate AVCs.

In this case, the employers scheme does facilitate AVCs so the poster is in some difficulty. The charges are very high, and I would really question the value of Marshs input here. They would appear to be getting 5% of your ongoing contributions, for providing advice on an ad-hoc basis, probably not much more than on 2 occasions, typically at the begining of a policy, and at the end, when you retire. I'm wary of commission based products anyway.

Is there any way of pushing employer, contacting union etc. to see if there is any way of reviewing these charges? Very often these schemes will not have been reviewed for years, and charging structures are completely out of date. There's lots of competition out there for business, I believe there would be room for negotiation if Marsh/Cornmarket were put under some pressure.
 
Not sure that hlm is correct - my understanding is that anyone in employment can effect a standalone PRSA AVC plan even if there is an AVC facility on offer from the employer. I think you're confusing it with the requirement for employers to provide a PRSA facility (with payroll deduction) if they operate a pension scheme which doesn't allow AVCs.

Separately I haven't looked at these plans recently but from memory there wasn't 2 charges (5% for Marsh and 5% for Irish Life) as outlined in the earlier post - there was a single 5% charge (not saying that's appropriate or otherwise given the size of the management charge but I just don't think there's a 10% contribution charge!)
 
in relation to the PRSA and AVCs, I got this information from the Pensions Board website, checking out the PRSA section, its stated there.
 
Hi him,

It would be great if you could link to the spot on the pensions board website or even cut and paste the quote.

Thanks,
aj
 
BBoru said:
...my understanding is that anyone in employment can effect a standalone PRSA AVC plan even if there is an AVC facility on offer from the employer.
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I can confirm that this is correct.

I work in the public sector and my employment arrangement does faciliate AVCs. However the union AVCs arranged through Marsh are very expensive in terms of charges, in my view.

I have set up a PRSA-AVC (independent of the union AVCs) through an execution only broker (100% allocation rate, 1% annual fee) for a one-off payment of €90.

The major drawback I have found is that my employer will not arrange salary deductions. I have had to arrange my own contributions and claim back PAYE/PRSI in the following tax year. If your cash flow situation is tight this might not be a suitable arrangement.

But the good news is – it can be done and the charges are much lower.

SPM.
 
You can also pay contributions to an AVC or standalone PRSA now and make a claim against last years taxes provided this is done before Oct 31.
 
The high commission on local authority, public service, etc . . . pension schemes is something I still don't understand.

How is it that the unions who are normally so good at extracting a good deal for their members (that is one of the jobs after all) in most regards seem to be content to have these high charges ?

Does anyone have any ideas on that ? Where is the benefit for a union member in going for one of these negotiated group schemes when they could get a cheaper deal going to a broker or going direct ?

z
 
Freddie - this had crossed my mind as a possibility, but I have no evidence in this regard.

It seems strange that members would willingly (or knowingly) pay those upfront fees and relatively large bid/offer spreads on all their contributions when it's not necessary. Some could view it as marginal, but the €800 in fees paid at the start of 30 years of contributions could be worth quite a lot by the time you get to retire. If there was some trade-off for this fee (like lower bid/offer) it could be worth it. Seems very strange.

z
 
limerickmick said:
I am working for local authority and my wife is a nurse.

I am in an AVC scheme with Marsh for the last 2 years and the value of my funds are less than my contributions - the charges seem huge, e.g Marsh charge 5%, Irish life charge 5% of each contribution, annual charge of 1.65% and an admin charge of 3.09 for every contribution which i pay fortnightly!

My wife is due to commence an AVC scheme and cornmarket are charging commisssion of 865 euros initially prior to other charges.

I would appreciate any advice as to our best option given that we will both be short circa 7 years on retirement.

I appreciate anybody taking the time to respond.
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As a public sector employee with a financial background I may be able to give some advice here.

If your both only missing 7 years and will be both receiving public sector pensions, you will definitely need some advice, if you go down the self-execution road there is a risk you will over fund (due to both your incomes in retirement) and it could cost you a hell of a lot more in the long run. The best advice I can give is to pay the fee and get the advice. (you will also get tax relief on this fee)

You could go down the PRSA route, but if you don't know what your doing in terms of tax returns again you could make a mess of it. You also would not get PRSI relief which is up to 6%.

Set up fee comes out over the first year, so that prob why it looks like theres a lot of charges

zag said:
The high commission on local authority, public service, etc . . . pension schemes is something I still don't understand.

Does anyone have any ideas on that ? Where is the benefit for a union member in going for one of these negotiated group schemes when they could get a cheaper deal going to a broker or going direct ?
z
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Nobody else has the expertise thats required, and this is why the unions have appointed these brokers. Fees used to be a lot higher.
 
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