Hi all,
New to pensions, have a basic question on costs.
My employer is looking into setting up a pension arrangement with AIB for myself and the other employees. I see that there is a 1% annual charge as well as a 5% contribution charge (ie, 5% of each contribution is deducted).
I realise from reading other threads that this 5% charge is common but it sounds outrageous to me, ie, that one's fund would have to appreciate by 6% per annum for me to breakeven. Am I misinterpreting things? Is it really that bad?
I know that the stock market tends to rise by an average of 8% or so over the very long run (that figure might be incorrect but I know it is in or around that region). Yet, the fees seem to be eating up almost all of those gains? Of course, if the market returns, say, 4% or 5% per year (it's done a lot worse over the last decade) the returns could conceivably be negative.
I know that the big plus with pensions is the tax relief and the employer contributions. The fact that AAM members are not aghast with indignation regarding the 5% charges suggests to me that I am misinterpreting the figures - I'd appreciate if someone could clarify.
Finally, Quinn Life pensions appear to charge an annual fee of 1%, with no contribution deductions. Any catch? I Know that people opting to go via certain brokers can pay a one-off fee and avoid the 5% contributions but would it not be simpler to go via the Quinn options?
Thanks in advance
New to pensions, have a basic question on costs.
My employer is looking into setting up a pension arrangement with AIB for myself and the other employees. I see that there is a 1% annual charge as well as a 5% contribution charge (ie, 5% of each contribution is deducted).
I realise from reading other threads that this 5% charge is common but it sounds outrageous to me, ie, that one's fund would have to appreciate by 6% per annum for me to breakeven. Am I misinterpreting things? Is it really that bad?
I know that the stock market tends to rise by an average of 8% or so over the very long run (that figure might be incorrect but I know it is in or around that region). Yet, the fees seem to be eating up almost all of those gains? Of course, if the market returns, say, 4% or 5% per year (it's done a lot worse over the last decade) the returns could conceivably be negative.
I know that the big plus with pensions is the tax relief and the employer contributions. The fact that AAM members are not aghast with indignation regarding the 5% charges suggests to me that I am misinterpreting the figures - I'd appreciate if someone could clarify.
Finally, Quinn Life pensions appear to charge an annual fee of 1%, with no contribution deductions. Any catch? I Know that people opting to go via certain brokers can pay a one-off fee and avoid the 5% contributions but would it not be simpler to go via the Quinn options?
Thanks in advance