Hi Folks, I current pay into a pension via my day job PAYE employment. I pay 5% of my salary matched by 5% from my employer, its with Irish life and is called Complete Solutions Company 1/fund name Multi Asset Portfolio 5 Series P. I also have a seperate pension which I pay a lump sum into yearly to offset tax from rental income with zurich called Balanced Pension & Invest. Both of these appear to have medium risk rating, combined I am contributing €9k approx. I was a bit of a late starter to the pension game and the current value of both is €32k (im 44 years of age). I understand the projections are to be taken with a pinch of salt but would it be ill advised to increase the risk rating on one pensio to high for a number of years as it appears ill have very little to loose?
Pension risk question
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Steven Barrett
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First of all, get out of MAPs. They are more expensive than other funds and don't produce the returns. If you want medium risk, the Consensus has a good track record.
With Zurich, the Balanced is a good fund but medium risk. Other flagship funds are the Performance and Dynamic. They've all been around for years and invest in the same assets, just different percentages between bonds and stocks.
What level of risk you take is a personal decision. If you can't handle the greater ups and downs of a higher risk portfolio, don't going into one. Risk and return are related, you don't get one without the other. If you are happy to invest in an equity fund and just let it do its thing without being too concerned, the Dynamic or the Blackrock Global Equity index are good funds. Irish Life also have index funds but I don't have a very high opinion of them.
Steven
www.bluewaterfp.ie
With Zurich, the Balanced is a good fund but medium risk. Other flagship funds are the Performance and Dynamic. They've all been around for years and invest in the same assets, just different percentages between bonds and stocks.
What level of risk you take is a personal decision. If you can't handle the greater ups and downs of a higher risk portfolio, don't going into one. Risk and return are related, you don't get one without the other. If you are happy to invest in an equity fund and just let it do its thing without being too concerned, the Dynamic or the Blackrock Global Equity index are good funds. Irish Life also have index funds but I don't have a very high opinion of them.
Steven
www.bluewaterfp.ie
There is nothing to stop you putting money from rental income into an investment fund - but you clearly cannot claim tax relief on those earnings. If you have other earned income, it may be possible to claim tax relief basd on that
Money is fungible in that where it comes from doesn't matter to where you spend it
Money is fungible in that where it comes from doesn't matter to where you spend it
David_Dublin
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I've a prett ymuch 50/50 split in Irish Life between Setanta Equity Dividend Fund Series P and Multi Asset Portfolio 4 Series P. Should I look at other options in IL for Equity/Medium Risk?
I receive a few thousand euro every year from rental income. My accountant gives me an amount of tax I owe to revenue on this income. I either pay the tax to revenue or paid an amount onto the pension to "offset/neutralise" what I owe.
What Pension Plan do you pay this contribution Into? Is it the Pension associated with your employment or is it a separate Pension? If the latter, what income is it based upon (because it can't be rental income)?
Its the latter, PRSA from a former employer which was dormant for a few years. I was advised to do this as I'm diversifying between Irish life and Zurich, surely its normal practice to use pension contributions to offset against tax owed?
Not sure who advised you to do this, but based on the information you have supplied here I don’t think this is a qualifying (exempt approved) pension. If you only have one source of relevant earnings (from your employment) then this is the only pension on which you can base tax deductible pension contributions. You might be better converting the PRSA into an AVC PRSA linked to your occupational pension. Otherwise, the contributions are not tax deductible.
Thanks Conan, I will definitely look into this further, I wouldnt mind but my accountant is the ultra cautious type generally who is very solid with his advice ... Appreciate the your help
Hi Steven. I would be interested in your view on this. Would you be able to explain your opinion on Irish Life Index funds a little more? Thanks...
Steven Barrett
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This article is 4 years old now but captures the reasons for my low opinion on their index funds. Given they have such a large slice of the Irish pensions market, you would expect better.
Tracking Error - Bluewater Financial Planning
Passive Funds and ETFs are hugely more popular these days than in the past. People believe that markets in efficient and that news about a company is quickly reflected in its share price, whether the news is good or bad. When investing in a passive fund, although the fund manager doesn’t have to...
Hi StevenTracking Error - Bluewater Financial Planning
Passive Funds and ETFs are hugely more popular these days than in the past. People believe that markets in efficient and that news about a company is quickly reflected in its share price, whether the news is good or bad. When investing in a passive fund, although the fund manager doesn’t have to...www.bluewaterfp.ie
I don’t want to take away from your core point about Irish Life index trackers but AFAIK Vanguard don’t have any funds that track the MSCI World index.
Steven Barrett
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Thanks for that Steven.This article is 4 years old now but captures the reasons for my low opinion on their index funds. Given they have such a large slice of the Irish pensions market, you would expect better.
Tracking Error - Bluewater Financial Planning
Passive Funds and ETFs are hugely more popular these days than in the past. People believe that markets in efficient and that news about a company is quickly reflected in its share price, whether the news is good or bad. When investing in a passive fund, although the fund manager doesn’t have to...
My company pension scheme is with Irish Life and I am a fan of passive investing so I picked their index funds but I have long suspected that their tracking error / implicit charges are not great.
Steven Barrett
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They have other funds besides MAPS which is a more expensive fund. There is a list of index funds under their platform that should be available.
The trustees pick the provider. Depending on the size of the scheme, the life company may just do investment only and the admin is done by Mercer, Aon etc or for smaller schemes, the life company does the admin. It is not my space, so I don't know what the charges etc are for these schemes and why Irish Life is the go to for schemes.
Steven
www.bluewaterfp.ie
My apologies Steven - I thought Vanguard stopped using MSCI indices about 10 years ago.
I've just checked the latest financial statements for that fund and the tracking error (Institutional Plus EUR ACC class) was only 1bps last year and 4bps from inception. That doesn't seem to tally with your figures so I wonder why is there such a difference?