Vested PRSA Vs ARF - whats the difference?

R

redstar

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While reading Irish Lifes Standard PRSA Policy guide - options available on retirement i saw these among the options....

"
Leave the fund in the PRSA taking withdrawals as you want

or

Invest in an ARF taking withdrawals as you want."

What are the benefits of choosing the Vested PRSA over an ARF (or vice versa). Whats the difference ? They seem to have the same rules regarding withdrawals and taxation.

Is it that remaining in the PRSA (ie vested) means you stay with the same provider (and funds selection?) whereas you can choose to buy an ARF from any other provider?
 
redstar said:
Is it that remaining in the PRSA (ie vested) means you stay with the same provider (and funds selection?) whereas you can choose to buy an ARF from any other provider?
Click to expand...

That's one difference. You can still switch funds within a Vested PRSA, but only from the menu on offer by the provider.

redstar said:
They seem to have the same rules regarding withdrawals and taxation.
Click to expand...

They do.

Another difference is that up to recently, annual charges on a PRSA were typically 1% per year or more. A Vested PRSA would keep the existing charges. An ARF can usually be arranged with annual charges of less than 1% so that's something to look out for.

That said, some of the newer breed of PRSAs that have launched in the past couple of years offer charges lower than 1% per year, so the lines between ARFs and Vested PRSAs are starting to blur.
 
So the main differences are charges and fund choices available.

My employers Group Standard PRSA has charges of 1% AMC and 4% of each contribution.
I'll shop around when the time comes.
 
I wonder is that Irish Pensions and Finance? If you go through them there's a 4% charge on lump sum contributions but no charge on regular contributions through payroll.

Either way I suggest you to shop around now, not when you retire and are looking for an ARF.
 
Its not great - its our employers group PRSA scheme (via Irish Life) - i suppose it covers the fact we have access to advice too, and 'an annual review' (ie increase your contributions). I haven't availed of that though.
 
Can you just contribute to that to the extent that they match your contributions but do AVCs separately via your own better priced PRSA?
(I don't know if that's possible in general).
 
redstar said:
My employers Group Standard PRSA has charges of 1% AMC and 4% of each contribution.
Click to expand...

My employer had an arrangement with a similar set of fees (many years ago). They took advice from independent financial advisors, and went shopping around. They got a lower AMC, and no contribution charge.

I realise it's not really within your control, but it would be worth advocating with your employer to get proper financial advice on this.
 
kickstart said:
My employer had an arrangement with a similar set of fees (many years ago). They took advice from independent financial advisors, and went shopping around. They got a lower AMC, and no contribution charge.
Click to expand...
Same, except we didn't even engage any financial advisors, we just shopped around and now have Master Trust with 0.65% AMC and 0% on contributions.
 
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