which pension provider?

H

househunter1

Guest
I'm in the process of setting up a pension at the moment. I've been talking to my broker who says I should choose one of the large pension providers who will charge roughly 5-6% of annual contributions on fees.

Q1
Is there any reason why I should go with these guys as opposed to say a quinn life tracker pension who charge only €3.50 per transaction and 1% of contributions and are more likely to perform better in the long run any way*

*80% of actively managed funds fail to track the market overall performance in the long term I've been told.

Q2
How easy is it to change the fund after a few years? the reason I'm asking this is I may want to switch over to a leveraged property fund after getting a pool of 60-80K together

Thanks in advance for any help
 
Ask your broker. Seriously. Ask him how much of the 5% will come back into his pocket. Watch him squirm.
 
More to the point, ask what YOU get for the 5% cut. You MAY get a service worth paying that amount for but you may not. In relation to pensions some key issues to consider are the charges levied, both on each contribution (e.g. bid-offer spreads or per contribution commissions etc.) and on an ongoing basis (e.g. annual management charges), fund selection available to you, flexibility (e.g. ability to transfer between funds, stop/start/modify contributions etc.). A good independent, professional pension advisor should be able to help you assess your needs and point you in the direction of suitable products/companies. Ideally such an advisor (e.g. an Authorised Advisor) should be paid on an agreed once off up front payment rather than via ongoing charges/commissions. After that you should aim to minimise charges. Be wary of intermediaries who are not truly independent and simply take their cut for doing something that you could do yourself.
 
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It really depends on if you want/need an advice service or if your happy to choose your own funds and get low charges.

If you want ease of movement out to a property fund in the future you should ensure there is no exit fees, bid/offer spread type charges in the fund.

Quinn Life markets on this ease of movement out in the future. I have seen this in a number of recent newpaper articles on their pensions and investments.
 
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Figure out what you think is a reasonable charging structure and what you need in terms of fund selection, switching facilities etc. Also consider which sort of pension vehicle (PRSA, personal pension plan, other) might be most suitable to your needs. THEN start considering who might be a suitable provider. Don't go about it the other way around. If QL do turn out to be a suitable candidate then do bear in mind that they charge a fixed fee for monthly contributions which must be considered. If you can't do all of the above analysis on your own then choose an Authorised Advisor, agree the work to be done and a fee to be paid and let them assist you.
 
Re: .

Thanks 'blank'
Whats the difference betwen a PRSA and a personal pension plan and what are the advantages / disadvantages of each?
 
Re: .

I think that there may be some comparisons of PRSAs and personal pension plans/Retirement Annuity Contracts elswehere on this message board if you search/browse. The Pensions Board website also has a lot of information on PRSAs and other pension vehicles although not much specifically on RACs.

www.pensionsboard.ie/
 
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Recent legislation has brought PRSA's and RAC's very much in line, in that tax and PRSI relief are available on both. The main differences are:

- You can continue to pay into PRSA while you are not earning for instance on a career break, and can claim tax relief on those contributions when you return to employment/self-employment.
- PRSA can accept transfers from occupational, RAC's and other PRSA's whereas RAC's cannot accept transfers from occupational pension schemes or PRSA's. A RAC taken out now can be transferred into PRSA at a later date.
 
Re: .

So there would be no real reason to choose a RAC over a PRSA then?
 
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RAC's can have lower charges that PRSA's. The lower charging PRSA's tend to have limited fund choice. If you find an RAC that has low charges, and you are interested in the fund choice then there is equally no reason not to choose RAC over a PRSA.

The point is you need to establish what you want; advice/direct, charging structure including consideration for exit charges, type of funds etc
 
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