ETF pension

[Jackman]

Hi
Are there any PRSA providers that allow you simply to invest in an ETF?

I am looking for one that will invest in say the Eurostoxx 50 index, and just track that at the lowest cost possible.

The advertised return of my current pension provider is 6% which I think is on the low side for equities, especially when the etf's dividends (say 1 or 2%) are taken into account.

I am not interested in managing my own shares (or have anyone manage them for that matter ) just track 2 or 3 broad etfs max.

Thanks!

 

[Steven Barrett]

New Ireland offer the Eurostoxx50 as part of their suite of funds. The AMC is 1%, which is the cost laid down in legislation for PRSA's. If you want a personal pension plan, you will be able to get it at 0.75%.

The 6% return is the maximum allowed by the Society of Actuaries. It is only a quote and has zero relevance in reality, no fund ever goes up in a straight line like that.



Steven
www.bluewaterfp.ie

 

[Jackman]

Thanks - so is 1% the minimum annual management charge for a PRSA fund by law?
That seems a bit expensive if the management fee of the etf is only 0.25% for example.

The 6% return is the maximum allowed by the Society of Actuaries. It is only a quote and has zero relevance in reality, no fund ever goes up in a straight line like that.

Is this the highest annual rate of return pension providers are allowed to quote in examples or the maximum return they will actually give on a fund?

Obviously the fund will never give 6% constantly but the average over 25 or 30 years should be a bit higher than that, more like 7 or 8% especially with dividends? Or are they factoring in inflation?

 

[Steven Barrett]

Thanks - so is 1% the minimum annual management charge for a PRSA fund by law?
That seems a bit expensive if the management fee of the etf is only 0.25% for example.

Is this the highest annual rate of return pension providers are allowed to quote in examples or the maximum return they will actually give on a fund?

Obviously the fund will never give 6% constantly but the average over 25 or 30 years should be a bit higher than that, more like 7 or 8% especially with dividends? Or are they factoring in inflation?

The 0.25% is the fund manager cost. Then you have the life company cost plus profit. All pensions are regulated products and are expensive to run. You will probably be looking at a total expense ratio of 1.04% for a fund.

There are guidelines laid down by the Society of Actuaries with a maximum return of 6% per annum. Equities should return higher, but the standard quote you get will say 6%.


Steven
www.bluewaterfp.ie