Pension charges need help

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rohora

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I took a personnel pension out with Eagle Star in 1997 and i fear that it might have high charges on it
I am not great with pensions and costs etc etc
i also have a PRSA pesion with work with Irish Life
I did the minimum with the PRSA in work as my company contributes so free money
When Irish Life where in they said that my eagle star pension probably has high charges as it was the older type pension and that i would be better to stop paying into it and put my contributions into the PRSA

i have 2 questions
1. i need to find out /talk to somebody who knows about pensions and can advise me on the older Eagle Star pension costs etc etc and what to do with it if it has high charges, i have all the documentation but just dont understand in € terms how much its costing me
2. should i put my money into the PRSA instead so avoiding the high charges and then looking at how should i take my pension fund from Eagle Star and move it to Irish Life costs in doing this etc etc

can provide info if needed

Help/pointers would be great
 
rohora said:
i have all the documentation but just dont understand in € terms how much its costing me
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What does this documentation say?
2. should i put my money into the PRSA instead so avoiding the high charges and then looking at how should i take my pension fund from Eagle Star and move it to Irish Life costs in doing this etc etc
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Are you still making regular contributions into the ES pension? If so and the charges are higher than the IL pension then it would probably make sense to stop and make the contributions to the IL pension instead. What charges apply on the IL pension?

I'm not sure if you can transfer from a personal pension plan into a PRSA.

You should get independent professional advice if necessary. IL sales people are not really independent no more than any other tied agents.
 
It says Management Charges
The company's investment expences relating to fund management are recouped by means of a 0.4% per annum management charge to Initial and Accumulator Units
Eagle star recover the initial expenses and charges involved in setting up a new policy by investing the first two years premiums(together with the first two years of any subsequent increase in premium) in initial units and these bear an additional managment charge of 4% per annum
full details of all managment charges are contained in tour original policy document.The management charge is based on a percentage of the relevent unit account as opposed to being a fixed monetary ammount
ploicy fee
ongoing admin expences are met by means of a policy fee which currently stands at €3.68 per month
16 March 2006

Are you still making regular contributions into the ES pension? YES
What charges apply on the IL pension?will check out tonight and come back to you

IL sales people are not really independent no more than any other tied agents. thats why i am asking


You should get independent professional advice if necessary.Can you give me advise who can do this for me and the cost i should expect

Thanks
 
Ah - initial units. This is sounding bad already. Initial units are often an opaque mechanism designed to hide hefty charges. Is there any penalty if you stop making ongoing contributions and switch to your IL pension (if the charges there are competitive/better)? If you stop making regular contributions will the monthly policy fee continue to be charged (through the encashment of units if necessary)?

I'd guess that the IL PRSA charges are probably the maximum for a standard PRSA - i.e. 1% annual management charge and 5% of each contribution.
 
There are 2 charges on my PRSA
1.A charge of 5% of any regular payments
2.A yearly charge ,set out as a percentage of the fund built up by these payments.This percentage of the fund built up by regular contributions depends on the fund or funds you invest in and is ser out in the table below

most of the fund charges are 1.35% and 5 of the funds have a slightly higher charge 1.85%,2% ,1.7%,1.6%
 
This must be a non standard PRSA since the charges on standard PRSAs are capped at 5% and 1%?
 
As ClubMan says, the Irish Life PRSA is a Non-Standard PRSA. The Irish Life Standard PRSA features charges of 5% per contribution and 1% of the fund per year.

In my opinion, the only justification for selling someone a Non-Standard PRSA is where the customer specifically requests a fund that is not available under the Standard PRSA.

Did you specifically request an Irish Life fund that wasn't available on their Standard PRSA?
 
this was all done by the company i work for so no imput into the type but having a non standard its not a bad thing just a slightly higher charge ??

getting back to my eagle star pension should they transfer it a lower costing pension if i request it ??

should eagle star if i request it give the actual cost € to me not just the % they charge etc etc as i have never had a statment of the actual costs or is this something they dont give out

should i just go and get an authorised advisor for help
 
rohora said:
this was all done by the company i work for so no imput into the type but having a non standard its not a bad thing just a slightly higher charge ??
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When the same or similar funds are available for a lower charge elsewhere then it is a bad thing in my opinion. But if this is the one that your employer has chosen then you don't have much choice if you want to avail of their contributions. Just make sure that the higher charges don't erode the benefit of the employer contributions to the extent that they might cancel out and you may be better off with a "standalone" 0%/1% PRSA of your own. I'm not sure if you can contribute the bare minimum to the employer PRSA and then have a separate standalone (e.g. 0%/1%) PRSA for AVCs (in which case you would have to claim tax and PRSI relief yourself).

The ES situation may be complicated and may merit professional advice. However from the sounds of things it may well be worth investigating further if it's worth ceasing regular contributions to it if the charges are hefty. It's hard to say given the info posted so far. I'm not sure what the options for transferring this to another lower charging ES or other provider pension might be.
 
It galls me to hear that you were sold a Non-Standard PRSA with higher charges without any real justification that I can see. It generates more commission for the sales guy. This sort of practice does no favours for the pensions industry. As you say, the Irish Life Non-Standard PRSA is not a bad product, but you're paying an extra 0.35% to 0.85% per year for a benefit (of arguable, if any value) you never even requested. This might not seem like a lot, but if you accumulate a fund of €100,000 over time, that's an extra €350 to €850 per year. :mad:

Anyway, send an e-mail to [email protected] quoting your policy number and ask them the following: -

(1) Current nominal fund value.

(2) Current transfer value (the value that they would give if you transfer it elsewhere)

(3) What fund are you invested in?

(4) List of all charges that apply to your policy on an ongoing basis.

Cut and paste their reply here.
 
Perhaps the employer requested a Non-Standard PRSA because it is clearly the Employer-appointed PRSA provider and perhaps they have agreed with Irish Life (the PRSA provider) to call out to the company to keep the employees/PRSA holders regularly informed of their PRSA entitlements, options at retirement, fund values etc...

To make such a rash conclusion (that the decision was made to "generate more commission for the sales guy") as the one made above seems unfair IMO.
 
Fisher Black said:
To make such a rash conclusion (that the decision was made to "generate more commission for the sales guy") as the one made above seems unfair IMO.
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Liam didn't say the decision was made TO generate more commission, just that an end result is that it does generate more commission for the sales guy. No unfair comment there, just a statement of fact. If I remember correctly, the full range of compliance issues apply to the sale of non-standard PRSAs, ie, full individual fact-find, research, recommendations and reasons why etc. Did the IL sales staff follow these procedures, and if so, was it a conscious decision of the OP to choose the non-standard over the standard option?
 
Well he did say this:
LDFerguson said:
This sort of practice does no favours for the pensions industry. As you say, the Irish Life Non-Standard PRSA is not a bad product, but you're paying an extra 0.35% to 0.85% per year for a benefit (of arguable, if any value) you never even requested.
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For all we know the employer made a conscious decision to have a Non-Standard PRSA so rushing to conclusions that there is something negative going on here is completely unfounded at this stage.

It's the Employer's decision (not the individual) to appoint the PRSA provider to whom the Employer is willing to make contributions.

Buddy - missiong out an Employer contribution of (let's say) 5% of salary to reduce a fund management charge of an extra (let's say) 0.5% on the fund would not be a smart move so I don't think there would have been any problems for the advisor to recommend this option.
 
Fisher Black said:
It's the Employer's decision (not the individual) to appoint the PRSA provider to whom the Employer is willing to make contributions.
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True - so do you think that an Employer can nominate Irish Life as the provider and specify that employees can only avail of Non-Standard PRSAs in order to qualify for the Employer contribution?
 
Yes - the Employer chooses the contract to which it will contribute, if it elects a Non-Standard PRSA then so be it.
 
Sounds unlikely in the extreme to me.

All employers must enter into a contract with a PRSA provider so that access to at least one standard PRSA will be available for all “excluded employees” as and from September 2003. In addition, employers must notify ‘excluded employees’ that they have a right to contribute to a Standard PRSA.

So are you suggesting that rohora's employer might have appointed a provider for Standard PRSAs and notified all employees of the availability of the Standard PRSA, but then said that if an employee wants to qualify for employer contributions, they must choose the Non Standard PRSA option?

Why on earth would an employer do that?

Let's ask rohora: -

  1. Did your employer (or their PRSA agent) offer you both Standard PRSAs with lower charges or Non-Standard PRSAs with higher charges, making it clear that you would only qualify for employer contributions if you chose Non-Standard?
  2. Did your employer (or their PRSA agent) explain the difference between Standard and Non-Standard PRSAs to you?
 
The Employer could easily want to do that because:

It is being paternalistic by offering an Employer Contribution & it may also be paternalistic by expecting the Advisor/Provider to make regular presentations on PRSA options, investment performance etc to PRSA holders...the Employer may not be able to afford/want to pay for the cost of this advice so it may have agreed with its Advisor/PRSA Provider that this cost would be met by a higher fund management charge.
 
I strongly suspect that forcing an individual to choose a Non-Standard PRSA over a Standard PRSA, by threat of withdrawing employer contributions if the employee chooses the latter, would be something that the Pensions Board would consider illegal. I can ask them if you want.

I'll ask one more question of rohora - apart from the original sales drive, do you get regular presentations from the PRSA advisor with updates on performance? (Ignore half-yearly statements from Irish Life which are automatic for all PRSAs, Standard or Non-Standard).
 
No need to ask them on my behalf, I am in an Occupational Scheme and very happy with it.

However I do speak to The PB and I am quite sure an Employer has the right to insist on any type of PRSA it wants for the PRSA that it is CHOOSING to contribute to - same as it can choose not to contribute to a PRSA for them at all (of course it would still have to provide access through payroll to at least one Standard PRSA with NO Employer Contributions in this instance).
 
Where an employer will only make contributions to a non standard PRSA and the employee contributes the bare minimum to avail of such employer contributions can the employee then open a "standalone" PRSA with lower charges for additional personal contributions and claim tax and PRSI relief separately?
 
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