No. uWhen starting a pension through employer, and where they match your contributions to a certain %, does the employee have any flexibility in choosing who this pension provider is? Reason for the question is the pension provider my employer use has an allocation rate of only 99.275%, and they take also charge 1% management charge on the fund balance. Over the course of a working life, this could end up costing €125-150k in charges.
My initial thoughts are:
(i) there's no flexibility in choosing this portion of my pension and to just suck it up as a 'cost of business' and acknowledge the employer contribution will more than make up for the mgmt fees above
(ii) I can make AVC's with another provider, with a more attractive mgmt fee.
Is this the right way to look at this or am I missing something? Thanks.
Employers done administer it, do they? Usually the outsource that?From an employer point of view, imagine trying to administer a "scheme" where everyone got their own individual plan.
Is this correct?Over the course of a working life, this could end up costing €125-150k in charges
They have to sign off on each application. The administrator has to ensure payments are made to each provider, so higher fees charged. Bigger schemes are completely administered by the admin companies such as Mercer, Unio etc (I doubt they are involved in this case) with the life companies just getting a lump of money.Employers done administer it, do they? Usually the outsource that?
Why is it beyond the realms of possibility for individuals to be able to choose a pension scheme , given its importance? Surely it would be easy to have a selection of options from which to choose? What would be the additional admin burden?
Is this correct?
Are people made aware od this by pension funds? Is there proper transparency regarding this?
I have seen this come up before on AAM. I really cant recall seeing anywhere on my annual statement the fees they took for that year. Im not talking about their fee structure/percentages etc. Im talking about brass tax - how many euros did pension fund take off me in the last year. Is this information one can expect to see or get?Yes - first when they sign up and then every year on their annual statement. The projected expense figures are calculated and shown to them on a Statement of Reasonable Projection.
But that irrelevant to my observation.It's a common feature of this forum to default to €1m fund sizes.
The average pension fund at maturity is still less than €150,000.
Yes, life companies make a lot of money off large funds. But it takes them 6-7 years to break even on pension plans. Look at Ger's average pot of €1,500 in fees at maturity. It had to start at some point and the life company received a few of euro in fees. Even someone who has €1m in their pension started at €0 at some point and the life company got next to nothing. It's not as if they have always received €10,000 a year from your pension.But that irrelevant to my observation.
For larger funds, and 500k at retirement isnt huge, the annual fee is 5k?! Thats excessive.
What additional fees are there along with this? Arent there other fees as well?
My annual statement simpky does not transparently tell me fees charged. Itd be helpful if it did
A lower percentage fee especially on pots above a certain value. More transparency around how many euros they charge. Per Gerards post , its confusing.Is a flat fee the solution? How will that work for people starting off their pensions?
Yep.. massive erosion on your hard earned income/investment over a long period!These companies are absolutely and utterly creaming it in commission and to suggest otherwise is wrong.
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