AVC's not performing / selecting a fund risk related with IRISH LIFE

HynesMA

New Member
Messages
6
I am putting 900 euro per month split equally into 3 different funds :
A Empower cautious fund.
B Multi Asset Fund MAPS 3
C Flexible Fund

They are all in Risk 3 category and all appear to be loosing value and falling !!! …. I am 60 with 5 years to go ……. my Question is should I leave them as they are or move them to lower Risk funds ???????? ……. also I am not happy with Irish Life charges relative to competitors !!! ?!!
 

SBarrett

Frequent Poster
Messages
3,586
You are invested in funds that aren't generating any returns. There is little to no return in bonds at present. Bonds also fell in value earlier this year. Add in charges and you are in negative returns territory. Reducing risk is going to cash and a definite negative return as there is zero return. It is difficult for the cautious investor at this time as there is nowhere to make a modest return without having to take on more equity exposure than they want. That is the decision you have to make, risk versus return.

On the charges, talk to your employer about the charges as they are the ones that decide which company to use.


Steven
www.bluewaterfp.ie
 

HynesMA

New Member
Messages
6
Thanks for your help Steven ……..

I am thinking of stopping any more AVC contributions to Irish Life as they are too expensive (funds underperforming) and move to some other company which offers better overall value, ……… any idea who would be good to move and start off AVC's with at 60years and 5 to go ??? ……..
 

ashambles

Frequent Poster
Messages
451
There is little to no return in bonds at present. Bonds also fell in value earlier this year. A


Steven
www.bluewaterfp.ie
I'm not quite sure how recent you mean my at present, but there is a return from bonds, typical euro gov bond funds are up around 5-10% this year. They look to me to be the best performing widely held funds of this year?


I'd forget about moving to another company, it's as likely to cost extra (especially over a company plan). If you think your company scheme is expensive you'll probably find it's a lot cheaper than an individual pension.

I think you need to look at changing funds within Irish Life first.

For myself with negative interest rates I'd avoid cautious funds even if a few years out from retirement, they might be 30% or more in cash - and pension companies could be charging you minus 2% for cash. so those funds will be giving disappointing returns for the foreseeable future.

Unfortunately selecting funds, particularly from the huge range Irish life have, is not easy. Irish life seem to believe more is better, but a lot of their funds now are pointless duplicates of other funds they sell.
 

HynesMA

New Member
Messages
6
Yes as you say ……
Unfortunately selecting funds, particularly from the huge range Irish life have, is not easy ……
These are my 3 existing AVC funds which are all in Risk 3 areas :

A Empower cautious fund.
B Multi Asset Fund MAPS 3
C Flexible Fund

Any help or suggestions changing to more promising funds at this time greatly appreciated as I am unexperienced in this area ! ??? ….

Regards,
Mike
 

Dave K

Registered User
Messages
24
HynesMA

I'd forget about moving to another company, it's as likely to cost extra (especially over a company plan). If you think your company scheme is expensive you'll probably find it's a lot cheaper than an individual pension.
While this is correct, I would recommend look at your options. While yes the AMC may be higher else where, this could be the difference of having someone providing you with more benefical advice. Are you getting the returns you need where you are? You have answered that already in saying your are possibly getting a negative return.
You do not have to make the AVC direct to your company and it may be in your best interest to do that.

While the charge may be higher else where, if you are getting solid advice you could and should expect a much better return even taking your risk rating into account and the higher AMC will be worth it.

My advice would be to speak with a Financial Advisor. It should not cost you anything to that and could be quite significant especially coming towards your retirement.

David
.
 

Dave Vanian

Frequent Poster
Messages
649
While the charge may be higher else where, if you are getting solid advice you could and should expect a much better return even taking your risk rating into account and the higher AMC will be worth it.
This has come up here before. Are you saying that a financial adviser can pick a fund for a client that will outperform others despite higher charges?
 

Dave K

Registered User
Messages
24
Hi Dave,
Well in theory you can set up a fund and get say an AMC of 0.75% and agree a fund with an advisor and he will be in contact at least once a year with an update. If the fund has grown, great you are both happy. But depending on how it is managed will depend on the amount of contact the advisor will have with you.
On the other hand you can set up a fund with say a AMC of 1% to 1.5% and with best advice can get a far bigger growth.
Take this year for example, there was a fantastic opportunity for growth but it would only have happened if there was contact between advisor and client and with switching between funds.
 

Allpartied

Registered User
Messages
156
This type of investor is getting screwed by the pension companies.
Really in the final 4 or 5 years you would be better off putting the money into National Savings Bonds.
You get a guaranteed small return, no charges, no risk. But you can't get the tax relief, so you are forced to pay these companies a big slice and then hope they don't lose you even more money by picking the wrong investment vehicle.
 

Dave K

Registered User
Messages
24
This type of investor is getting screwed by the pension companies.
Really in the final 4 or 5 years you would be better off putting the money into National Savings Bonds.
You get a guaranteed small return, no charges, no risk. But you can't get the tax relief, so you are forced to pay these companies a big slice and then hope they don't lose you even more money by picking the wrong investment vehicle.
You state they would be better of putting money into Savings Bonds but then follow that up with 'But you cant get tax relief'

Take someone paying 40% tax. They look to put money into Savings of €100. They earn €100 less tax 40% so have €60 to put into Savings. So for them to put in €100 euro into savings they actually need to earn €166 euro before tax to have a net of €100 euro.
Take someone who puts it into a Pension instead, they get the tax relief and so can actually put in the full €166 into their pension and on their pay slip they are only down net €100 euro.
So going by this someone puts 100 into savings compared to 166 into pension (same net difference on their pay as paying 40% tax) the pension in theory can lose nearly 40% and still be on level par as savings. So to say people are better off putting money into savings I do not agree.

I think we have gone off topic a bit so apologies.
 

Dave Vanian

Frequent Poster
Messages
649
Take this year for example, there was a fantastic opportunity for growth but it would only have happened if there was contact between advisor and client and with switching between funds.
So, as a broker, you claim that you can spot fantastic opportunities for growth IN ADVANCE and advise your clients to switch funds to avail of them, while charging a higher fee/commission for your service. Sorry but I don't believe that's possible. How many years of a track record of correctly advising your clients when to switch funds have you got?
 

Allpartied

Registered User
Messages
156
You state they would be better of putting money into Savings Bonds but then follow that up with 'But you cant get tax relief'

Take someone paying 40% tax. They look to put money into Savings of €100. They earn €100 less tax 40% so have €60 to put into Savings. So for them to put in €100 euro into savings they actually need to earn €166 euro before tax to have a net of €100 euro.
Take someone who puts it into a Pension instead, they get the tax relief and so can actually put in the full €166 into their pension and on their pay slip they are only down net €100 euro.
So going by this someone puts 100 into savings compared to 166 into pension (same net difference on their pay as paying 40% tax) the pension in theory can lose nearly 40% and still be on level par as savings. So to say people are better off putting money into savings I do not agree.

I think we have gone off topic a bit so apologies.
Sorry, I may have been a bit unclear.
Obviously they are better off putting the money into a pension fund, even if they get charged 4 or 5% and then lose another 2 or 3 % in the market, because they get the 40% tax rebate.
My point is that there should be a state run vehicle for pension investments, which mimics the National Savings Bond rates, guarantees a return and allows the investor to avail of the tax rebate.
I have had this discussion with others on this issue before and I am still unable to understand why this type of option is not available.
Particularly, for those who want to turbo charge a final pension contribution in the last 4 or 5 years of their working lives.
 

Conan

Frequent Poster
Messages
1,180
Sorry, I may have been a bit unclear.
Obviously they are better off putting the money into a pension fund, even if they get charged 4 or 5% and then lose another 2 or 3 % in the market, because they get the 40% tax rebate.
My point is that there should be a state run vehicle for pension investments, which mimics the National Savings Bond rates, guarantees a return and allows the investor to avail of the tax rebate.
I have had this discussion with others on this issue before and I am still unable to understand why this type of option is not available.
Particularly, for those who want to turbo charge a final pension contribution in the last 4 or 5 years of their working lives.
But the return on National Savings Bond type vehicles is minuscule. This type of investment won’t “turbo charge” a contribution.
 

Allpartied

Registered User
Messages
156
But the return on National Savings Bond type vehicles is minuscule. This type of investment won’t “turbo charge” a contribution.
If you only have a 5 year investment plan, then you might prefer the guaranteed 1 or 2%. Coupled with the 40% tax rebate, it makes for a very healthy return.
A Pension fund will charge you a percentage, and then invest it in a vehicle which may well lose you money.
It's a choice people should be able to make, but they can't , they have to put their savings into a private pension fund, if they want to avail of the 40% tax rebate.
It's possible better returns will be available from these private companies and the money they charge will be money well spent. But why no choice?

I have a quote from IPF, which has the following prediction

Monthly Contribution 1859pm from Jan 2021 to Oct 2025

Total Contributions ( 58 x 1859) = 107822

Expected Fund in October 2025 = 102858

This is with an optimistic return of 3% pa.

So I will be down 5k, even if they get 3% growth per year.

Is that a good deal?
 
Last edited:

Dave Vanian

Frequent Poster
Messages
649
I have a quote from IPF, which has the following prediction

Monthly Contribution 1859pm from Jan 2021 to Oct 2025

Total Contributions ( 58 x 1859) = 107822

Expected Fund in October 2025 = 102858

This is with an optimistic return of 3% pa.

So I will be down 5k, even if they get 3% growth per year.

Is that a good deal?
No it's not a good deal. You can get better than that. Shop around. It's possible to set up a pension plan with charges of around 1% per year when they're all added up. So if the projection is that the fund increases at 3%, you'd get around 2% growth.

The charges on this plan are evidently much higher than that as they're swallowing all your growth and then some. Avoid. Remember that the broker decides the level of charges applying to a plan. So if one broker is charging more than you'e willing to pay for the service provided, find a different one.
 

Dave Vanian

Frequent Poster
Messages
649
State Savings at the moment are returning less than 1%. If you want to access them you'd need a self-administered pension plan.

Alternatively you can choose a low-risk fund choice but in the current climate the "return" on that is likely to be less than zero.
 

SBarrett

Frequent Poster
Messages
3,586
So, as a broker, you claim that you can spot fantastic opportunities for growth IN ADVANCE and advise your clients to switch funds to avail of them, while charging a higher fee/commission for your service. Sorry but I don't believe that's possible. How many years of a track record of correctly advising your clients when to switch funds have you got?
Just to give ADVANCE notice to anyone who is thinking of contacting me, I CANNOT spot fantastic opportunities in advance. And I won't tell you to switch funds very often either. I reckon MSCI have better ability, knowledge and expertise to design an index that represents the world stock market than I do, so I take advantage of their expertise. :)


Steven
www.bluewaterfp.ie
 

GSheehy

Frequent Poster
Messages
385
I have a quote from IPF, which has the following prediction

Monthly Contribution 1859pm from Jan 2021 to Oct 2025

Total Contributions ( 58 x 1859) = 107822

Expected Fund in October 2025 = 102858
Woeful stuff.

Find someone else.
 

Allpartied

Registered User
Messages
156
Just to give ADVANCE notice to anyone who is thinking of contacting me, I CANNOT spot fantastic opportunities in advance. And I won't tell you to switch funds very often either. I reckon MSCI have better ability, knowledge and expertise to design an index that represents the world stock market than I do, so I take advantage of their expertise. :)


Steven
www.bluewaterfp.ie
Woeful stuff.

Find someone else.
IPF are one of the brokers who can deal directly with public servants and the contributions can be taken directly from salary, incorporating the tax relief. So that is an advantage. Cornmarket the other provider are even worse.

So how would I go about setting up the same pension plan independently. Would it be worth paying an indpendent advisor to help set up a less costly plan?
 

GSheehy

Frequent Poster
Messages
385
@Allpartied

Salary deduction isn't an advantage if the cost of that route is prohibitive.

You can easily claim the relief yourself , see here

If you know what product provider you want to invest with and you're happy with an AVC-PRSA then you can scroll through the Discount Broker page, contact one or two of them and ask about the costs. The only part of the transaction that you might need help with is fund selection, but if you're risk averse your options will be limited to two or three funds anyway.

Folk on here will help you, if you get stuck.

Just ask.
 
Top