Executive Pension pot transfer

NotMyRealName

Registered User
Messages
24
Any advice welcomed. I've 600k in an EPP with a main provider. Currently pay 1%AMC plus 3% on lump sum contributions. Plan to load up by approx 100k over next 3-4 years in lump sums and then leave work, take lump sum and invest in ARF. Is it worth moving this to another provider at this stage?I'd be comfortable with execution only and picking my own investments.
 

kevhenry

Registered User
Messages
110
Have you always had that 3% contribution charge or is it a more recent thing?

Executive pensions are priced in tiers (based on age brackets) but they should have an allocation rate of 100% at inception. Anything less than 100% allocation on lump sums at the stage you're at now would get you lower than 1% elsewhere. It should also qualify you for lower charges with your current provider too.

Insurers don't like rewriting their own contracts for many reasons but I think they would look at it to prevent a €600k fund (or potential €700k-€800k ARF) from walking out the door so I would start there if I was you.

If you don't have an assigned advisor to discuss it with (who won't want it rewritten either) then give their customer services a call with the same approach as you would if ringing to switch your broadband provider.

You could simply tell them that you're looking to transfer your fund to another manager and want to know what paperwork they would need from you to facilitate this. Once your account balance pops up on to their screen someone from their business retention team would be on to you pretty quick to have a chat and/or arrange an appointment to speak with one of their advisors.

If you get that far then it would be the advisors job to keep you on board and this is when you can start to negotiate terms. If they don't offer you better terms in the end then you have a lot of alternatives to explore in the market since €600k would give you some leverage.

Aviva, for example, have an EPP pricing platform where base annual management charges start from 0.3% for their lifestyle strategy and 0.4% for standard funds. There's a minimum transfer value requirement of €200,000 to be eligible for this particular contract (with a 3 year minimum term) and you might also need to factor in an additional trail fee which could be an extra 0.25% or 0.5%.

There are commissioned options on the Aviva platform that start at 0.4% (0.5% for standard funds) excluding trail fees that have nominal monthly policy fees for the lower initial transfer requirement of €25,000. However, these contracts are set over a 5 year minimum term rather than a 3 year term.

Similarly, the other providers in the market offer full platform EPP options which can be set up on a commissioned or non-commissioned basis (depending on your age and remaining term to retirement) for lower than what you're currently paying.

It's also possible to have EPP's set up with no early exit penalties with some providers or you could change course altogether and look at self-administered arrangements but it might be better to leave that for your ARF in a few years.

In any case, there's a big market out there and there are always deals to be had for those prepared to look for them.

Notwithstanding the fact that charges are only one part of the equation, you're still paying both a 1% AMC on €600,000 (which is costing you €500/mo currently) and a 3% contribution charge (representing €3,000 from your future €100,000) so I think you're paying more in charges than you should be IMHO. And I'm assuming you're not paying trustee fees but that's not a given either.

What you're looking to have in terms of investment functionality would also need to be factored in. There's a lot of things to consider in all this as you can see :)

kevin
www.thepensionstore.ie
 

NotMyRealName

Registered User
Messages
24
Kevin,
Thanks for that.
Yes re. 3%. In fact that's for lumps of over 12k......it's 5% if under that.
I've neglected this,attention-wise, for quite a while and only in the last few years as I've added substantial lump sums, and the pot grew bigger, did I pay more attention to the fees.
The pot is diversified in 5 funds ( 4 are my selection, and 1 is the original opening lifestyle option)
Contributions have ALWAYS been slow to be applied to my account, but last summer hit a new low. I transferred the funds (16k)in July and, after prodding, finally saw it in my account in mid Sept. I complained and asked for the contribution charge (€480) to be waived. They declined and offered €100. I took that as an insult and told them to shove it. They countered with €250......which I took but now I'm angry....and here.
"A satisfied customer tells 3 people, a dissatisfied customer tells 10"
I have a couple of business associates with the same type of plan with that provider, so I'll encourage them, and any readers out here, to pay attention.......mostly when your pension pot is modest. That's when the legacy damage is done.
I'll get into this on Monday and I'll post my results on the thread.
Any other posters input/ experiences by the way, is welcome.
Thanks
 

NotMyRealName

Registered User
Messages
24
Ok Gerard,
It seems that they changed the format of my annual statement after 2017....It no longer lists total transfer/surrender value. ( More sleight of hand??)
Anyway, as of Feb 2017 , Value of unit holding and Total surrender/Transfer value were identical to the cent...
 

TheBig40

Registered User
Messages
58
Kevin,
Thanks for that.
Yes re. 3%. In fact that's for lumps of over 12k......it's 5% if under that.
I've neglected this,attention-wise, for quite a while and only in the last few years as I've added substantial lump sums, and the pot grew bigger, did I pay more attention to the fees.
The pot is diversified in 5 funds ( 4 are my selection, and 1 is the original opening lifestyle option)
Contributions have ALWAYS been slow to be applied to my account, but last summer hit a new low. I transferred the funds (16k)in July and, after prodding, finally saw it in my account in mid Sept. I complained and asked for the contribution charge (€480) to be waived. They declined and offered €100. I took that as an insult and told them to shove it. They countered with €250......which I took but now I'm angry....and here.
"A satisfied customer tells 3 people, a dissatisfied customer tells 10"
I have a couple of business associates with the same type of plan with that provider, so I'll encourage them, and any readers out here, to pay attention.......mostly when your pension pot is modest. That's when the legacy damage is done.
I'll get into this on Monday and I'll post my results on the thread.
Any other posters input/ experiences by the way, is welcome.
Thanks
I’d a similar situation to this and eventually managed to move to 100% allocation and .55AMC on funds. I still have some stuck in one of the older funds because the transfer value was shocking but should be able to shift this towards the end of the year. I did the calcs on additional cost of fees versus what’s id lose in TV and just left some where it was.

whole process was a chore in trying to get information from the broker and the pension company. They made it as hard as possible to look at all the options and it only made me more determined to make changes. Shifted the whole company pension scheme in the end.
 

NotMyRealName

Registered User
Messages
24
Well ,as it turns out, my contract has transfer value at total fund value on date of transfer. Also my company is the scheme trustee if that's relevant
 

kevhenry

Registered User
Messages
110
If the current value and the transfer value/surrender value are the same then you don't have a contract with either initial units or applicable early exit penalties. This means you're free to move which, again, is just one more potential roadblock that's not in your way.

Initial units are an incredibly powerful 'incentive' to prevent people from moving providers because it means penalising them a lot of money to do so. Therefore, most people stay put.

That said, if neither of these penalties apply then this gives you additional leverage in your advisor meeting since you have nothing to lose and everything to gain.

The cost of outsourcing the trusteeship is nominal but it does offload any responsibilities to an external, third party trustee company. The costs of the trustee are not a major factor at all but they would be waived on a new EPP with a potential €600,000 transfer coming in anyway. Some providers even take on the trustee fee on an EPP regardless of transfer value size or regular contribution amount.

They just include it as part of their offering to act as a differentiator in a very competitive market.

kevin
www.thepensionstore.ie
 

thumbelina

Frequent Poster
Messages
44
Aviva, for example, have an EPP pricing platform where base annual management charges start from 0.3% for their lifestyle strategy and 0.4% for standard funds. There's a minimum transfer value requirement of €200,000 to be eligible for this particular contract (with a 3 year minimum term) and you might also need to factor in an additional trail fee which could be an extra 0.25% or 0.5%.

There are commissioned options on the Aviva platform that start at 0.4% (0.5% for standard funds) excluding trail fees that have nominal monthly policy fees for the lower initial transfer requirement of €25,000. However, these contracts are set over a 5 year minimum term rather than a 3 year term.
What is the 'trail fee' outlined above - is it potential broker commission which could be negotiated with the broker? Do Aviva have any kind of a minimum there or is it purely between the client and the broker.

For example, with a large fund - could it be setup as 0.3% to Aviva and 0.1% to the broker?
 

NotMyRealName

Registered User
Messages
24
Kevin/Gerard
Many thanks for your input. I note you are both professionals in the field. However, your free contributions to a forum like this are GREATLY appreciated by dabblers, like me. Perhaps I may require professional assistance and ,if so , I'll be in touch.
On Monday I'll contact my provider and attempt a negotiation. But I won't be dilly-dallied. If there's reluctance, I'll just move on.
My feeling is if I got the allocation rate to 100% and the AMC close as possible to 0.5% then that might represent a reasonable deal with the least disruption. Any thoughts?
Also, I'm thinking, with a new arrangement and only 3-4 years left then future transfer value charge is probably not important but what's normal @ redemption lump sum stage? Might a new policy have a sneaky end of term charge?
 

kevhenry

Registered User
Messages
110
The discussion on trail fee is one between the broker and the client which will encompass ongoing service levels and agreements etc..

Ultimately people want to get value for a service they're paying for but the fees themselves are negotiable for larger cases like anything else in life.

However, some providers have fixed increments of trail fee e.g. either 0.25% or 0.5% whilst others offer tiered increments of 0.05% up to a set maximum of 0.5% for example.

kevin
www.thepensionstore.ie
 

kevhenry

Registered User
Messages
110
Kevin/Gerard
Many thanks for your input. I note you are both professionals in the field. However, your free contributions to a forum like this are GREATLY appreciated by dabblers, like me. Perhaps I may require professional assistance and ,if so , I'll be in touch.
On Monday I'll contact my provider and attempt a negotiation. But I won't be dilly-dallied. If there's reluctance, I'll just move on.
My feeling is if I got the allocation rate to 100% and the AMC close as possible to 0.5% then that might represent a reasonable deal with the least disruption. Any thoughts?
Also, I'm thinking, with a new arrangement and only 3-4 years left then future transfer value charge is probably not important but what's normal @ redemption lump sum stage? Might a new policy have a sneaky end of term charge?
Apologies if I misinterpreted something you said earlier. If you're saying that there is a transfer value charge then that's always an important factor to consider.

If you have funds with initial units on your EPP i.e. funds that would impose a financial penalty on you for moving them before their set maturity date, then that is a barrier.

If your provider is who I suspect it to be then you could have initial units that are set to an NRA (normal retirement age) of 70. I have had more than a few clients over the years who latterly discovered that that was the type of plan they had. Hopefully you don't have that but you need to know what to look for and that's certainly something to check.

With initial units built into a contract there isn't really anything you can do to alter them without triggering the penalty i.e. it may not advantage you to rewrite it unless the cost of the penalty can be offset somewhat by an extra allocation on your transfer value.

It's all very simple and straightforward! :p

kevin
www.thepensionstore.ie
 
Last edited:

GSheehy

Frequent Poster
Messages
385
My feeling is if I got the allocation rate to 100% and the AMC close as possible to 0.5% then that might represent a reasonable deal with the least disruption. Any thoughts?
Yes, that's reasonable for your fund level.

Also, I'm thinking, with a new arrangement and only 3-4 years left then future transfer value charge is probably not important but what's normal @ redemption lump sum stage? Might a new policy have a sneaky end of term charge?
When you're negotiating a price on the transfer, ask that question and get the answer in writing. Remember, there are no disclosure requirements on EPPs so it's important to nail down the facts about all charges before you commit.

You should be able to get a competitive price with and without early exit/transfer charges. The AMC on the no exit charges contract might be a small bit higher though.


PS: When you paid the €16K in July and it wasn't applied to the policy until mid-September, was the €16K invested at the unit price in July?


Gerard

www.prsa.ie
 

NotMyRealName

Registered User
Messages
24
Yes, that's reasonable for your fund level.



When you're negotiating a price on the transfer, ask that question and get the answer in writing. Remember, there are no disclosure requirements on EPPs so it's important to nail down the facts about all charges before you commit.

You should be able to get a competitive price with and without early exit/transfer charges. The AMC on the no exit charges contract might be a small bit higher though.


PS: When you paid the €16K in July and it wasn't applied to the policy until mid-September, was the €16K invested at the unit price in July?


Gerard
 

NotMyRealName

Registered User
Messages
24
**UPDATE**
My advisor tells me that he'll have an update on possible new terms by tomorrow morning at the latest. In conversation earlier he was not very optimistic about my request for 100% allocation and .5% AMC. Which of the other main providers might be more likely to offer best terms to me, as I'd like to start looking at fund selection?
 

NotMyRealName

Registered User
Messages
24
***UPDATE.. UPDATE***
They'll do 100% allocation , but .75% with no early encashment or transfer charges.
Can I do better....is it worth it??
 
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