Acorn Life SSIA?

KenH

My SSIA matures soon. I'm with Acorn Life (for better or worse). I'm just looking at the projection image on this page:

http://www.acornlife.ie/web/internet/Products/SSIA.html

Now it appears they're doing well. But I was told I'd end up getting about 19 grand after tax. I'm confused....23% of 9 grand (the gains) doesn't equal 5 grand.
Any help would be appreciated as I'm now questioning whether I should re-invest with Acorn.

RainyDay

KenH wrote:

But I was told I'd end up getting about 19 grand after tax. I'm confused....23% of 9 grand (the gains) doesn't equal 5 grand.

Where are you getting the 9k and 5k figures from?

Acorn have a reputation for high fees & charges, so check out exactly what fees/charges apply to any reinvestment options you are offered and compare against other market options.

jor el

I'm somewhat confused too. There's no tax on the SSIA except for DIRT on the interest. Your investment, plus the government 25% bonus is untaxed. Only the interest made on the savings is taxable. The 23% exit tax is only applied if you withdraw money from the SSIA before maturity. I'm not too sure but I think DIRT tax is currently 20% of the interest.

So, according to that website, if you had invested the maximum amount your interest is €4951 which means you pay 4951 x .2 = €990.20 in DIRT at maturity of your SSIA.

I'm assuming you have a standard fixed rate deposit account and not an equity based (PIP) investment.

KenH

7. What are the tax implications of maturity of my SSIA?
When your SSIA matures, only the profit earned from the investment of both your subscriptions and Exchequer tax credits will be liable to tax at 23%. In the case of an SSIA that is a deposit account this profit will be the interest earned. Your financial institution will deduct this tax and forward it to the Revenue Commissioners. There are no further tax liabilities concerning your SSIA.

The above is from the revenue website. So, that would be:

23% of 4951 = 1138.73

Take this away from the 24 grand and what an Acorn Life SSIA holder should be getting is around:

€22861

Right?
I had an equity based account.


Edit:
I just found this site. If you put 254 into the first calculator, you come out with a similar balance. The rest must be accounted for in fees. Crazy.

http://www.ssiaoptions.ie/information/ssia-calculator.asp

RainyDay

Are you sure you knew what you were doing when you chose an equity SSIA instead of a deposit SSIA? An equity account is, by definition, unpredictable. The return depends on market performance, which is not possible to predict 5 years in advance.

I'm still not sure where you got the €25k figure from, but I guess it was the standard projected return shown on your proposal form, which was based on a standard 8% return. The actual return achieved can vary significantly, depending on the market performance. I'm sure this was clear in the paperwork that you signed.

While Acorn have a reputation for high fees, these fees would have been detailed in the proposal form - did you read through it at the time?

KenH

My gross is projected as 24k which is about right as it's so short a time before it's mature. I'm happy with that.

My problem is I'll only get 19k net. That's alot of tax...so I'm assuming the rest is made up with fees. But it seems to be a similar figure to other SSIA schemes.

RainyDay

I don't think anyone can help confirm/deny your suspicion about fees until you confirm where you are getting your €24k & €19k figures from?

KenH

24k is the gross figure I'm told the account will matured at and it's confirmed in the image on this page (under the acorn logo):

http://www.acornlife.ie/web/internet/Products/SSIA.html

19k is the figure I'm told I'll actually receive.

24-19 is 5K.

RainyDay

I'm still confused. Were you specifically informed that your own, personal account would mature at €24k, or is this a general figure that you've picked up?

I suspect that there are two things accounting for the difference. One is that the actual performance of your specific account was not up to the projected performance, for whatever reason. Did Acorn offer a choice of markets/funds in which you could invest? The second difference is probably the fees, which may have been up to 5% of every deposit you made.

Who sold you the Acorn product? He/she probably made 5% of your contributions on commission. At least make them earn their keep by getting to explain why they recommended Acorn (other than the commission, of course).

KenH

Thanks guys. I got it cleared up with a rep from Acorn. The 19k was the figure I'd get if I took out my money early. I'm actually going to come out with around 23k (after tax and fees already paid) which I think is pretty healthy.