Cornmarket AVC Fees & Some Misc Queries

I joined the CS in 2018, and by 66 (currently in mid 30s) I will have the full forty years. I'm looking at setting up an AVC. My preliminary query is regarding overfunding. Am I right in saying that as my pension will be based on average career salary, it is very unlikely that I will overfund?

Secondly, I have been dealing with Cornmarket, and I am wary of the fees. They are outlined as below: €595 "consultancy fee", 0% contribution charge for regular contributions (which I will be doing), 4% contribution charge for each single premium contribution.

The AMC is 1%, which is then tiered as funds increased and they have advertised the fund fees are "expected to total between 0.1% - 0.2% each year". Image re fees below.

My question is whether there is much I can save by pursuing other options - while not having to claim the tax relief myself by having it all done through my payslip is handy, I am prepared to claim from revenue myself if there is a meaningful saving to be found elsewhere. Any help or pointers much appreciated - in particular discussion re the AMC fees in this example compared to others would be much appreciated.

You can avoid the 595 set-up fee by using an alternative PRSA-AVC provider.

AFAIK, getting a lower than 1% AMC isn't easy.

I think I read on here that because PRSA-AVC have a lot of required compliance, that increases the costs. Maybe I am not recalling things correctly.

I'm sure another poster will clarify things.

I don't think I've seen PRSA-AVC at 0.75% AMC.


LA brokers charge 0% contribution / 1% AMC, although I see they have a 0.75% AMC if the contribution exceeds 500 pm



www.prsa.ie charges 1%.

You can take out a policy through Cornmarket without a consultation if you wish to avoid the fee.

Yes, to be fair to Cornmarket, I forgot that they now have an execution-only service.

I have already had a consultation (but not signed up to anything) with Cornmarket, so it would feel somewhat dishonest of me to let that 'lapse' and go with execution only.

The 595 set up fee does not overly concern me compared to the ongoing fees. However if 1% is typical and it is 100% allocation then it seems I would be as well to go with them, but I await others input, many thanks to those who have done so thus far.

Just a word on the Cornmarket "consultation". It is not a consultation or anything approaching independent advice. It is an exercise on their part to identify what they can sell you, and to pitch it to you. Going in knowing that, it can still be a useful exercise.

The structure above is an Occupational Pension AVC. There are no commission disclosure requirements on these types of AVCs.

A PRSA AVC is different insofar as, there are commission disclosure requirements, there can't be early exit charges (say, if you wanted to move the fund to another AVC/AVC PRSA at a later date) and some third party (other ongoing) costs (OOCs) can't be charged to the client. An example of the latter would be (say) Prisma 5 from Zurich Life where (current as at 31/12/2023) OOCs are 0.07% for some products but just 0.03% for PRSAs. The AMC s only part of the story, the OOCs might be high on the structure above.

Yes, it's true that PRSA costs to the provider are greater than other pension products. Probably to the tune of circa 0.10% pa. Less margin for them but competition is good in the (Standard PRSA) space and I'd say volumes of new business are compensating them in part.

Difficult to make a decision on the funds available, as we only have hindsight to go on, but I'd have a look through the factsheets and compare similar to (say) Adventurous (in percentages allocated to the different asset classes) funds, from other providers, over the same periods quoted. If the fund isn't going to do the same or better than an alternative (by 0.25%/0.50% pa) then you're giving up the benefit of the tiered AMC.

Gerard

www.prsa.ie

Compounding said:

Just a word on the Cornmarket "consultation". It is not a consultation or anything approaching independent advice. It is an exercise on their part to identify what they can sell you, and to pitch it to you. Going in knowing that, it can still be a useful exercise.

Click to expand...

Oh yes, these are sales reps.

One of the reasons I try to use discount brokers is when I saw the Cornmarket rep drive into our driveway, in a better car than mine.

Protocol said:

Oh yes, these are sales reps.

One of the reasons I try to use discount brokers is when I saw the Cornmarket rep drive into our driveway, in a better car than mine.

Click to expand...

I've just found out in January that I am on a Post 2004 Pension Scheme (New entrant) and not the Pre 2004 Pension Scheme apparently.

Unfortunately, there isn't a way to know from your Department of Education and Science payslip whether you are pre 2004 or post 2004 and a pension service record can take years to get and then years to sort. So even doing financial reviews with independent financial advisors - when you think you are giving the correct info, you may not be. From my payslip, I knew I was on the top and correct pay scale (Scale 25), therefore assumed I was on the correct pension as started working in 1997.

When I spoke to teachers union (ASTI), I was advised to 'accept my new pension situation'.

ASTI played down the benefit of getting back the 1.5% Spouse and Child Gross Pension - not worth it. I have found out since that it would be worth up to €20,000 back on my lump sum, on the Pre 2004 Pension Scheme.

They heavily pushed towards using Cornmarket, in that:

I sighed silently, as the UNION, is well known for not helping its members with legal cases, and Cornmarket always feel like they sell, sell, sell at all costs.

Has anyone worked with a non-union recommended pension advisor for a Teachers Pension, when you are not clear of whether an AVG is the right move or not.. that was able to help?

GSheehy said:

The structure above is an Occupational Pension AVC. There are no commission disclosure requirements on these types of AVCs.

A PRSA AVC is different insofar as, there are commission disclosure requirements, there can't be early exit charges (say, if you wanted to move the fund to another AVC/AVC PRSA at a later date) and some third party (other ongoing) costs (OOCs) can't be charged to the client. An example of the latter would be (say) Prisma 5 from Zurich Life where (current as at 31/12/2023) OOCs are 0.07% for some products but just 0.03% for PRSAs. The AMC s only part of the story, the OOCs might be high on the structure above.

Yes, it's true that PRSA costs to the provider are greater than other pension products. Probably to the tune of circa 0.10% pa. Less margin for them but competition is good in the (Standard PRSA) space and I'd say volumes of new business are compensating them in part.

Difficult to make a decision on the funds available, as we only have hindsight to go on, but I'd have a look through the factsheets and compare similar to (say) Adventurous (in percentages allocated to the different asset classes) funds, from other providers, over the same periods quoted. If the fund isn't going to do the same or better than an alternative (by 0.25%/0.50% pa) then you're giving up the benefit of the tiered AMC.

Gerard

Click to expand...

Thank you. My reading of it is that there is not a huge amount in it, especially when taking into account the tiered element in the longer term.

My concern is with regard to not wanting to be "ripped off" - my conclusion on this seems to be that this particular Cornmarket marketing is competitively priced taken in the round... Especially is I am willing to pay a tiny bit extra for the handiness factor.

ACER10 said:

I've just found out in January that I am on a Post 2004 Pension Scheme (New entrant) and not the Pre 2004 Pension Scheme apparently.

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@ACER10

AFAIK, the main difference between pre 2004 and post 2004 is the retirement age.

Pre-2004 can retire from 60, post 2004 can't.

Protocol said:

@ACER10

AFAIK, the main difference between pre 2004 and post 2004 is the retirement age.

Pre-2004 can retire from 60, post 2004 can't.

Click to expand...

65 is retirement age for post 2004 with no 33 / 55 rule.
- 4 years B.Ed can be used for pension age eligibility rules for Pre 2004 and not Post 2004.
- You can apply to get the 1.5% spouse and children pension back, if neither apply to you in the pre 2004 scheme and this is worth approx €20,000.
- Impossible to financial plan for AVCs without knowing exactly what scheme you are on. If pre 2004, I was advised to wait and just buy a €14,80 last minute AVG before retirement to top up pension, and pay back from lump sum based on retirement age of 60 years.
- If I now am on the Post 2004 scheme, knowing how many AVC's to buy, if hopefully still working by 65 years is difficult to work out.
You'd need a crystal ball.

I applied to work as a long term volunteer in march 2004, pension changes were brought in between April 2004 and February 2005.

I resigned a rolling EPT (eligible part time) contract in Feb 2005, as that was when long term volunteering placement started.

I was assisted with financial planning advice before going through VSO and Comhlamh. I remember getting advice about 'ethical investments' way before sustainability was marketable. I remember been told that pension contributions would be paid through Dept of Social Welfare and on my return, that the it was all confirmed. I had no clue until January 2004, that separately under pensions and payroll, the LTV role moved me to a "a long term absence of more than 26 weeks" and into the new pension scheme.

On my return, I easily received increments for time away, as was still working in Education, but just under a VSO volunteering contract.

I have recently found out that other VSO volunteers were able to get occupational contributions as well as state contributions as they had "formal career breaks" as in permanent contracts.

However, those years 2000 to 2005, were really difficult to get permanent contracts. I was working on a rolling EPT contract and full hours from 2000 to 2005 in the same school.

I should probably delete this. Venting and trying to clarify things in my head. ASTI and Comhlamh advice is "it is, what it is" and "it is still a great pension scheme".

im 2004 hse employee and this is the first i heard about claiming spouses and children pension back so could somebody please expand on this as interested on claiming this

Protocol said:

@ACER10

AFAIK, the main difference between pre 2004 and post 2004 is the retirement age.

Pre-2004 can retire from 60, post 2004 can't.

Click to expand...

As an aside (different from Acer10 as I had no break in service) I started in the public sector (3rd level) in 2001 but only joined the pension scheme in 2007 (stupid but I had no clue then). I am now in the post 2005 scheme, but have the same conditions re retirement age etc as pre 2005 employees - i.e. I can retire on full pension at 60.

ACER10 said:

Has anyone worked with a non-union recommended pension advisor for a Teachers Pension, when you are not clear of whether an AVG is the right move or not.. that was able to help?

Click to expand...

I'd also be very interested in hearing anyone's advice on this also....

I know nothing about his firm.

ToFixorNotToFix said:

As an aside (different from Acer10 as I had no break in service) I started in the public sector (3rd level) in 2001 but only joined the pension scheme in 2007 (stupid but I had no clue then). I am now in the post 2005 scheme, but have the same conditions re retirement age etc as pre 2005 employees - i.e. I can retire on full pension at 60.

Click to expand...

Wow.. ok.. must be different scheme for 3rd level. In post primary education, there is a pre 2004 (called old entrant) or post 2004 (called new entrant). Both appear the exact same on the payslip, so you cannot tell the difference.
Then later pension schemes a 2011, pre 2013, and most recently post 2013(Single Public Service Pension Scheme).

GSheehy said:

The structure above is an Occupational Pension AVC. There are no commission disclosure requirements on these types of AVCs.

Click to expand...

Hi @GSheehy , in the Cornmarket screenshot in the first post here, it says "Cornmarket is paid initial and renewal commission out of the opposite referenced charges for the ongoing administration and marketing of your AVC Scheme. They are not additional charges."
Do you mean there might be other other commission/charges that aren't stated by Cornmarket, or are you making a different point?
Thanks!

I meant that you don't know the level of them because there's no obligation on the intermediary to disclose them. They're explicit on a PRSA AVC as disclosure is compulsory.

I suppose, it's likely that there may be early exit penalties on them also, which is a charge, if you wanted to transfer the value elsewhere.

Building on the posts above, I have been investigating setting up an AVC and have a question about the different fee setups if anyone is able to assist.

It seems that fees can vary quite a bit. One broker has suggested a Zurich AVC PRSA, but with 95% allocation and 1% AMC. I am questioning the value of a 95% allocation over a 20-25 year period, when there are execution only Zurich AVC PRSAs with 100% allocation and 0.75% AMC on contributions over €500. However, I am not entirely confident in setting up the execution only one correctly (things such as picking the most appropriate fund options, transitioning into safer investments closer to retirement, and the application forms I’ve reviewed not appearing to be correct in places).

Even Cornmarket’s AVC scheme would appear to be better value, €595 consultancy fee, 0% regular contribution charge, and a tiered AMC starting at 1% dropping by 0.25% on any amount in the AVC between €40,000 and €140,000 and by a further 0.25% on any amount greater than €140,000. Although I note that certain funds may have additional annual costs and fees of between 0.1-0.2%.

For a non-execution option, Cornmarket still seems better than a 95% allocation (€595 up front versus say 5% of €500/month for 20 years (€6k) and even worse with larger regular contributions). Or is there something that I am missing?

It's not complicated to decide on suitable funds.
Just choose a mixed asset fund at your comfortable risk level.
Financial advisors will give you general advice to choose higher risk levels and reduce risk nearing retirement. You can choose the automatic reduction of risk option at the set up stage, or you can change to this option at any later stage. This change is unlikely to result in extra fees.

The execution only broker will check your application forms for errors before sending them to the provider. They would also assist you if you have a difficulty completing the application. They don't assist in fund choice or risk level, but can assist in other areas.

Judging by your post here, you will be well capable of setting up your application correctly.