Teachers AVC's Is it worth continuing

Y

Yendor

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Sorry to jump into this thread, but its very similar to my own situation. [Ive spit this question out from another thread - aj]
My wife is a teacher, and has an AVC scheme in place with Cornmarket for a number of years at this time. For some reason (i'm sure it was valid at the time) because she had been off for a couple of years (children) we had decided to setup AVC to begin the process of buying back these years.

She's working part time now and so her actual AVCs are very very small - nothing much more than a token effort (1-odd %)

I happened to look at a Account Statement from Cornmarket last night and was amazed to see that they have taken something like 23% in Admin Charges and Fees from the 5-600 euros that she's paid in .

So we're very much inclined to stop these AVCs altogether and put the 40-50 euros a month into paying off the car or other ongoing expense.

As mentioned elsewhere in the thread, this Union scheme seems crazy and can't be any more favourable than if we checked out our own scheme (admittedly I've not done this yet!)

Any thoughts / opinions ? should we simply drop the AVC or suck it up as thats just the way it is ?

Up to now, we've not really paid much attention to Pensions - i'm revisiting Mrs Yendor's first as its simpler ... we've tended to consider our two properties as our pension.
 
Pension investment is long term so stick with it. The fee comes out in the first year and thats why it seems like your paying a high % in fees. Every year you will see this % reduce.

Property while at the moment is a good investment, in the long run do NOT rely on this alone for your pension. Spread your risk and possilbly even increase the AVC. Get some professional financial advice.
 
sunshine? said:
Get some professional financial advice.
Click to expand...

Get some independent professional financial advice.

What are the charges associated with this AVC?

Yendor said:
....we had decided to setup AVC to begin the process of buying back these years. ........
Click to expand...

Im a bit confused here when you say "buying back years" what do you mean? Is your wife buying back service in the main superannuation scheme or is she simply contributing a certain percentage of her salary to the AVC?

added later: Is it this [broken link removed] scheme as outlined in the asti website? and explained in this AAM post a few years ago? and also this question (might require a login) from the Irish Independent from 2004.
 
you can buy back avc from dept of ed.
i think the salary protection scheme from cornmarket is important to have
 
Thanks AJ : much better to take this off into its own thread.

To answer the questions / clarificiations raised :-

Sunshine: there doesn't seem to be any/much reductions visible so far. My wife is in the AVC scheme for 4+ years at this stage, and her charges as per the Accoutn Summary recently received were a whopping 23.7% of contributions.

June: As noted by Ajapale elsewhere - I don't have an issue with pension contributions, my query regards the value of the AVC element, particularly with these high level of admin charges.

Ajapale: Reading the links you provided it would seem that she's in the AVC scheme. No references to buy back scheme .. .to me it was a case of catching up her pension contributions for the years off-work. We weren't aware of the formal Buy-Back scheme.

So thanks for the opinions and thoughts so far ... i've a wee bit more reading to do (the links provided) -> however from this thread and other threads on AAM, I think we'll be stopping the AVC for my wife on Monday morning.
 
You can either buty notional service or an AVC from cornmarket. I bought the latter nine years ago as cornmarket told me that it was cheaper. Don't know if I took the right advice- any views?
I retire in just under five years.
 
Can't comment on the AVC's, but my wife is a teacher and she used to get all sorts of products from Cornmarket, personal loans, car insurance etc, they were unbelievably expensive. It is my belief that they abuse their dominant position (which i believe is achieved with union support) within the education sector.
 
Hi Ajapale,

Could you suggest where one might look for independent financial advice in the West of Ireland. Would IFRSA be the best place to contact?

Mnay thanks
 
Alas Kythryn, I dont know where one can get independant professional financial advice in the West of Ireland. IFSRA is certainly a good place to start.

Im assuming you are a teacher in the teacher's superannuation scheme. In additon to being an 'independent professional financial advisor' anyone offering advice would need to be familiar with the rules of the teacher's scheme and the revenue rules and the various AVC product offerings out there.

aj
 
Short answer - No!

My wife was paying into a Woodchester AVC since early 1997. Scheme did not break even for her until 2005 (contributing approx. €4k p.a.)

Repeated requests for a breakdown of costs, both verbal and in writing, failed to achieve anything other than extra copies of information booklet.

My wife opened an independent PRSA last March, so her charges are set at 5%, if she increases her contributions, the charge falls to 3% - we'll see how the first year goes but looking good so far.

Unfortunately her Woodchester/Cornmarket fund must stay with them until retirement, but hopefully it will have grown a little by then.

ASTI AVCs:
Dept. of Ed takes a 1% charge from your contributions, justified on the basis of the "difficulties in collecting the contributions".

Then there is the 5% management fee taken by Woodchester/Cornmarket off the gross contribution.

At the end of the year there is the Woodchester/Cornmarket annual management fee, generally 1% but, hidden in the booklet the Concensus Fund fee is given as 1.75%.

Woodchester/Cornmarket push people for a meeting with their advisor. This will cost you €832, the same as the initial consultation fee. If you want to vary the contribution without a meeting, just inform them - it will then only cost you €416. Clearly if you go for an annual consultation you will be fleeced.

Our advice - if you haven't a Woodchester/Cornmarket Teachers AVC - don't go there - get an independent PRSA AVC. If you do have one, get out. Between the Dept. and Woodchester/Cornmarket the costs of staying in this scheme are exorbitant and unjustifiable.

btw, the independent PRSA AVC isn't payable thro' the Dept. - you'll have to pay it thro' your current a/c
 
Thanks everyone for their postings & thoughts.

We've stopped AVC contributions for my wife.

All in all this seems an awful racket, and I'm very dissappointed in the ASTI in allowing such a situation develop on behalf of their members.

I'm going to write a letter to Cornmarket asking for a clarification on where/how the dedecutions were worked out ... she certainly didn't ask for Consultations ... I vaguely remember she had one X years ago, but i'm sure that she didn't appreciate that there was an £X00 bill for same - particularly as the details provided by them were nothing that we didn't know ourselves.
 
Ho, ho, ho. Where did the brains in the department of Education come up with that one ? It's hard to see how it could be hard to collect contributions when they run the payroll, and even if there were difficulties in collecting the contributions why should they punish those who don't cause any difficulty ?

I'll tell you one thing - if my employer decided to deduct 1% of my AVC contributions I would not be happy at all.

As for the other charges - 1.75% for a *concensus fund* - that's just bizarre. I ain't no pension fund manager, but I do know that a concensus fund is not one of the more risky (and hence requiring more active management) funds. It's like that bloke in the kit-kat ad - middle of the road. If I was a fund manager, all I wold have to do would be to read everyone elses daily/weekly market summaries, match what they are doing and the fund manages itself.

And they charge you €416 just to vary your contributions ? Assume someone on €40,000 is paying 10% into their AVC - that's €4,000 contributions. So, to change their contribution will cost them over 10% of their contributions for the year. You could pick any salary levels & contribution levels, but no matter which way you look at it that charge is crazy.

z
 
Marathon Man said:
Short answer - No!

My wife was paying into a Woodchester AVC since early 1997. Scheme did not break even for her until 2005 (contributing approx. €4k p.a.)

Repeated requests for a breakdown of costs, both verbal and in writing, failed to achieve anything other than extra copies of information booklet.

My wife opened an independent PRSA last March, so her charges are set at 5%, if she increases her contributions, the charge falls to 3% - we'll see how the first year goes but looking good so far.

Unfortunately her Woodchester/Cornmarket fund must stay with them until retirement, but hopefully it will have grown a little by then.

ASTI AVCs:
Dept. of Ed takes a 1% charge from your contributions, justified on the basis of the "difficulties in collecting the contributions".

Then there is the 5% management fee taken by Woodchester/Cornmarket off the gross contribution.

At the end of the year there is the Woodchester/Cornmarket annual management fee, generally 1% but, hidden in the booklet the Concensus Fund fee is given as 1.75%.

Woodchester/Cornmarket push people for a meeting with their advisor. This will cost you €832, the same as the initial consultation fee. If you want to vary the contribution without a meeting, just inform them - it will then only cost you €416. Clearly if you go for an annual consultation you will be fleeced.

Our advice - if you haven't a Woodchester/Cornmarket Teachers AVC - don't go there - get an independent PRSA AVC. If you do have one, get out. Between the Dept. and Woodchester/Cornmarket the costs of staying in this scheme are exorbitant and unjustifiable.

btw, the independent PRSA AVC isn't payable thro' the Dept. - you'll have to pay it thro' your current a/c
Click to expand...

you dont pay the fee if you tell them you want to do it on a execution basis only
 
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