Standard PRSA Extra Costs

Dominic Ó Galla

Dominic Ó Galla

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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
 
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.
 

Attachments

  • RangeOfFundsFeb2025.pdf
    1.7 MB · Views: 15
Dominic Ó Galla said:
I would ultimately like to build a PRSA fee comparison tool
Click to expand...

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.

Dominic Ó Galla said:
Bid/Ask spreads: Up to 5% for some popular Zurich funds
Click to expand...
No bid/offer on a PRSA. It would be a 'third' charge. It's bid to bid.

Dominic Ó Galla said:
Even the pension brokers I’ve spoken to seem unsure
Click to expand...

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
 
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?
 
@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.
 
Thank you all for the very helpful input.

In the end, I decided to use figures per the Pensions Authority fee spreadsheet.

So it's certainly not perfect, but hopefully shines at least some light on the fees people are paying/products that are out there.

It's live now on the domain PensionCheck(.)ie, so if you have any feedback on the tool itself, please do share - its early days and I anticipate the current version will be only the first iteration among many.
 
This is not correct:

Prsa Explained

pensioncheck.ie pensioncheck.ie
  • Tax relief on contributions at your combined marginal rate of income tax + PRSI + USC
Click to expand...

Tax relief on pension contributions

This page outlines the tax relief available for pension contributions
www.revenue.ie www.revenue.ie
Income Tax relief is given at your ‘marginal’ (highest) tax rate. There is no relief from Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) for employee pension contributions.
Click to expand...
Also...
From age 60, you can access your PRSA ...
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You can access a PRSA from age 50. E.g.:
www.irishlife.ie

What is a PRSA?

Answers to some of the most asked questions when it comes to PRSAs.
www.irishlife.ie www.irishlife.ie
Early retirement from age 50 is available to employees who have retired from PAYE employment and are not working elsewhere either as an employee or in a self-employed capacity.
Click to expand...
 
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Are Royal London included in the tool? Didn't come up in the calculations for me.
 
Thank you all for thought-provoking questions and feedback - I've made several changes based on your input.

@GSheehy I strive to only do business with high-quality brokers, and would be interested to hear if you have specific qualification critera that I should add. So far, I've only one broker on board, he has decades of experience, a strong reputation, and from talking with him it's clear he's up to speed.

@llgon Yes they are (as are all providers). See the 4th result with default inputs.
 
The benefit of the website to anyone that uses AAM is zero.

The information/content doesn't have to be accurate, at all. No more than AAM, a newpaper article or blog posts on broker websites have to be.

It's a referral site for brokers that want to buy a lead. Maybe someone starting out in business might find it useful but good brokers get automatic referrals so there would be no need for it. The notion that you might get one of the lower cost PRSA structures on the website, where a broker has to pay for a referral and (obviously) provide an advisory service, just doesn't sit right.

There are some 'loose' restrictions on what product providers/brokers can include in quotes to potential customers. They're not as regulated as disclosure notices/schedules. It wasn't uncommon back in the day to have growt rates of 13% included in quotes. It's more like 5.5% now for pensions so that customers have more realistic expectations on outcomes. Even allowing folk to use 10% (whilst referring to past performance), even though there's not regulatory impediment to doing so, is a bit too much though.
 
I'm also skeptical of the usefulness of such a site. I'm a fan of minimising charges but to me that just means getting a low AMC and 100% (maybe 101% in some cases?) allocation/transfer rate. These days an AMC of 0.5% or lower maybe. I know that there may be other charges and the AMC may not be the full story in terms of TER/PTC but I'm not sure that it's worth getting too worried about them. Maybe I'm wrong/naïve? And then it's a case of making sure that the money is invested appropriately and there's appropriate flexibility for retiring maybe on a phased basis. I'm not sure that looking at a pension purely from the perspective of the charges as this site does makes most sense. And, to be honest, I find the information presented difficult to understand. As I say, maybe I'm taking too simplistic an approach here but I've put my money where my (de facto retired) mouth is and it's served me well so far.
 
ClubMan said:
I'm also skeptical of the usefulness of such a site. I'm a fan of minimising charges but to me that just means getting a low AMC and 100% (maybe 101% in some cases?) allocation/transfer rate. These days an AMC of 0.5% or lower maybe. I know that there may be other charges and the AMC may not be the full story in terms of TER/PTC but I'm not sure that it's worth getting too worried about them. Maybe I'm wrong/naïve? And then it's a case of making sure that the money is invested appropriately and there's appropriate flexibility for retiring maybe on a phased basis. I'm not sure that looking at a pension purely from the perspective of the charges as this site does makes most sense. And, to be honest, I find the information presented difficult to understand. As I say, maybe I'm taking too simplistic an approach here but I've put my money where my (de facto retired) mouth is and it's served me well so far.
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Wife is about to start choosing a solution and your post encapsulates our thinking. Once you go beyond this it gets quite complicated and I know her eyes will glaze over.
 
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