Standard PRSA Extra Costs

[Dominic Ó Galla]

Standard PRSAs have two well-known fees as the fund level:

• “Contribution” (0% to 5%)
• “Fund” (Up to 1%)

But what about the asset level?

• Annual fees which could easily be an extra 3% per year for an actively managed fund. I’m really struggling to find data on this. For example, searching “Prisma 5 Key Information Document” on Google doesn’t bring up a clear answer as to what the fees for that fund are
• Bid/Ask spreads: Up to 5% for some popular Zurich funds, for example
• ... and more?

My undertanding is that the second category goes on top of the first, and could easily make up the main chunk of the cost. Can anyone confirm/disprove? Even the pension brokers I’ve spoken to seem unsure. Asking becuase I would ultimately like to build a PRSA fee comparison tool

 

[S class]

Prisma 5 has an extra 0.03% annual charge.
Extra charges for Zurich funds are listed in the attachment.
If the broker is quoting a 1% AMC, the total annual charge for Prisma 5 would be 1.03%.

You can avoid the up to 5% contribution fee entirely if you open your PRSA through an execution only broker.

 

[GSheehy]

I would ultimately like to build a PRSA fee comparison tool

This would necessitate product providers disclosing commercially sensitive, third party, portfolio transaction costs (PTCs) so I'd say the chances of that are nil. Even if that info was available, you'd have to update it at least once a year as other ongoing and portfolio transaction costs vary from year to year.

Bid/Ask spreads: Up to 5% for some popular Zurich funds

No bid/offer on a PRSA. It would be a 'third' charge. It's bid to bid.

Even the pension brokers I’ve spoken to seem unsure

Find better ones.


Honestly, you'd have zero chance of getting the PTCs from every Standard PRSA provider in the market. Your entry point of contact for the information would be the actuarial dept.

If you're concerned about PTCs and the impact they might have on your fund, go Article 6 Index Tracker as the (general) total additional costs on a global tracker on pensions is circa 0.02%.


Gerard

www.execution-only.ie

 

[ClubMan]

Are PTCs the same as or part of Total Expense Ratios? Do (m)any pension providers publish TER info? Should the Pensions Authority mandate that they do?

 

[LDFerguson]

Additional charges for Royal London funds can be seen by clicking into the factsheet for the fund in question here. https://funds.royallondon.ie/

 

[GSheehy]

@ClubMan

The most imortant thing to know about PTCs is that they exist on all passsive & managed funds. The second thing to remember is that they're variable. The third thing to know is that they are included in the past performance figures published by all product providers. On the latter point, it's still very difficult to compare funds across different providers as every collator of fund info does not tell you what level of AMC (if any) is included in the figures. And that includes the ones that advisors pay to have access to, as far as I know.

Under PRIIPs, this is how TER is calculated Here

Other Ongoing Charges/Additional Investment Expenses/ CIV Charge (these are some of the terms that providers use for the explicitily disclosed additional charges on the fund) so, TER under PRIIPs = AMC + OOC or AIV or CIVC?

PTCs are not explicitly disclosed by any provider. They're in the past performace figures. That's it.

Can the Pension Authority force a provider to publish commercially sensitive information? I doubt it.

What I have noticed is the reduction in OOCs, Additional Management Charges and PTCs from the provider I transact most business with over the last 6 years. Very good news for the policy holder but goes completely unnoticed.