My husband's pension charges are much higher than mine

[Bern78]

Coming back to this - after reading through other threads on pensions.

my husband makes 5% contributions and company matches. Then we make AVCs of 15% into same fund.

the company he works for only has 1 fund choice, so I wonder about the costs. The costs for his pension are 3.49 policy fee monthly, 105.25 allocation and 0.75 AMC.

for my pension the costs are 0.3 AMC ( usually 0.6 but subsidised by company) and 100% allocation. Taking costs into account ( not performance as no one can predict the future) is it better if I move my husbands AVCs to another fund choice.

 

[Bern78]

Just wondering does anyone have any advice- Is my husbands pension fee structure very bad compared to the general market? We are maxing out our pensions based but I don’t want to if his cost structure is too much. My husband only gets one fund choice so is it even possible to set up an AVC separately ourselves ?

 

[Dave Vanian]

When I see 105.25% allocation, I'm going to guess that there's also a 5% bid/offer spread - effectively a charge. You can check this. One cancels the other out. 105.25% x 95% = 99.99%. If that's the case your husband is paying €3.49 per month and 0.75% per year.

That's okay if it's a small pension scheme. If it's a large scheme (say 100 members+), the employer could get a better deal but that's up to them to look.

His only option for an AVC outside the employer's scheme is to set up his own AVC PRSA. Best charges he's going to get with that are 100% investment and 1% of the fund per year, or maybe 0.9% for Vanguard funds.

If you're both paying high-rate tax, could you max out your AVCs instead? Maybe you are already.

 

[Bern78]

When I see 105.25% allocation, I'm going to guess that there's also a 5% bid/offer spread - effectively a charge. You can check this. One cancels the other out. 105.25% x 95% = 99.99%. If that's the case your husband is paying €3.49 per month and 0.75% per year.

That's okay if it's a small pension scheme. If it's a large scheme (say 100 members+), the employer could get a better deal but that's up to them to look.

His only option for an AVC outside the employer's scheme is to set up his own AVC PRSA. Best charges he's going to get with that are 100% investment and 1% of the fund per year, or maybe 0.9% for Vanguard funds.

If you're both paying high-rate tax, could you max out your AVCs instead? Maybe you are already.

Thanks for the reply. I will find that out re bid-offer spread.

I am maxing my pension out too- we are both top rate taxpayers and both have capacity to max them out.
It doesn’t look like we will be able to do much better than what we have. Hopefully the fund will perform good at least.

 

[Dave Vanian]

Thanks for the reply. I will find that out re bid-offer spread.

I am maxing my pension out too- we are both top rate taxpayers and both have capacity to max them out.
It doesn’t look like we will be able to do much better than what we have. Hopefully the fund will perform good at least.

Roughly how many members are in your husband's scheme? Ultimately it's the employer who chooses the pension scheme. If it's uncompetitive, they might be influenced to seek out a better deal for their employees.