Paying a lump sum into a pension to lower 2017 tax

St1mpMeister

Ah right, so brokers are like affiliates or re-sellers then.

Are financial advisors generally tied to one or more provider and try to push you toward a provider they can earn commission with?
(hence the reason to meet with more than one)


Also is €200 for 2 hours a typical sort of cost for meeting with a financial planner?

Heres Johnny

A broker needs to have 5 companies they can place your business with in order to call themselves a broker.

Pros: more choice
Cons: could potentially favour the one that pays him the most and might not be 100% familiar with all the products. Usually little after sales service.

Multi agency intermediary: Like a broker but has between 2 and 4 companies they can place your business with. Pros and cons the

Tied agent: self employed agent of 1 company.
Pros: should know the products inside out. Should give good follow on advice as you will be their client to look after the financial institution will insist on it.
Cons: little choice

Employee: employee of a financial institution. Like a tied agent only employed so less choice again. Inclined to be less worried about follow on advice as they are an employee

Talk to some of the above and seriously, take a month to digest it all.

If you are still struggling, take the info you have learned to an independent fee based advisor to help you make a choice between all your options.

ANXIOUS

St1mpMeister wrote: »

Ah right, so brokers are like affiliates or re-sellers then.

Are financial advisors generally tied to one or more provider and try to push you toward a provider they can earn commission with?
(hence the reason to meet with more than one)


Also is €200 for 2 hours a typical sort of cost for meeting with a financial planner?

Most would not offer the initial chat for free.

St1mpMeister

Any idea on what sort of price I'd be looking at for an initial financial advisor chat?

I think AIB and other banks do it free, but obviously pushing their own products, but might be good for initial discussions to get better idea of options out there (and also to help me sort the questions I'd need to ask a broker without wasting time)?

St1mpMeister

No ideas on the costs then?

Geuze

St1mpMeister wrote: »

No ideas on the costs then?

Ask questions here or on AAM, and get good answers for free.

Geuze

St1mpMeister wrote: »

Hi all, I have no work pension. I turned 40 in October and had planned to start a pension in January 2018.

I would like, though, to put something in this year if it helps to get back some of the PAYE tax I paid in 2017.

Assume for arguments sake that my net income for 2017 was 60K.



Q1: Is it possible for me to open a pension before the end of the year, pay a lump sum into it, and claim a tax refund in 2018?

Q2: Assuming the lump sum is something like 15K, what tax do I get back?

Q3: As I only turned 40 in October, am I allowed to put the full 25% of my 2017 earnings into the pension?

Q4: How do I decide between pension providers? Are they all the same, what benefits do I look for when deciding on one over the other?

You can start a PRSA in Nov/Dec 2017, put a lump-sum in, and get tax relief on this in respect of the 2017 tax year. You get the relief when you do the 2017 tax return.

Tax relief is at your marginal rate, which for many people is 40% on income over 35k approx.

By the way, conts are expressed as a % of gross earnings [you refer to net?]

Geuze

Limits for tax relief on pension contributions
Tax relief for employee pension contributions is subject to two main limits:

an age-related earnings percentage limit
a total earnings limit.


The age-related earnings percentage limits
You can get tax relief on your pension contributions up to the relevant age-related percentage limit of your earnings in any year. This relief is only from the employment in respect of which the contributions are made.

The age-related earnings percentage limits are:

under 30: 15%
30-39: 20%
40-49: 25%
50-54: 30%
55-59: 35%
60 or over: 40%.
For example, an employee who is aged 42 and earns €40,000 can get tax relief on annual pension contributions up to €10,000.

St1mpMeister

So... PRSA or Pension then?

St1mpMeister

Geuze wrote: »

Ask questions here or on AAM, and get good answers for free.

Not really sure people here will be able to say "based on your profile, go for this pension fund"

The answers here are more informational than a direct lead to the final decision.



So, next decision... PRSA or Pension then?

Also regarding costs, is €200 the norm? Not sure why no one here knows this.

ANXIOUS

St1mpMeister wrote: »

Not really sure people here will be able to say "based on your profile, go for this pension fund"

The answers here are more informational than a direct lead to the final decision.



So, next decision... PRSA or Pension then?

Also regarding costs, is €200 the norm? Not sure why no one here knows this.

I've already said with most brokers the initial meeting is free, so putting my Sherlock Holmes hat on €200 is a bad deal.

Heres Johnny

ANXIOUS wrote: »

St1mpMeister wrote: »

Not really sure people here will be able to say "based on your profile, go for this pension fund"

The answers here are more informational than a direct lead to the final decision.



So, next decision... PRSA or Pension then?

Also regarding costs, is €200 the norm? Not sure why no one here knows this.

I've already said with most brokers the initial meeting is free, so putting my Sherlock Holmes hat on €200 is a bad deal.

I concur with this. When I was an advisor I talked to loads and loads of people about pensions, investments, insurance.

Some took out policies there and then, some used the info to talk to other providers, some came back and placed business with me, others didn't. Lots just learned from the meeting and didn't go ahead with anything with anyone.

I don't think anyone had a negative experience in meeting me and the meetings were free unless someone placed business then I was paid by the financial institution through the clients charges.

Don't pay for initial meeting, but do talk to a few different providers.

St1mpMeister

ANXIOUS wrote: »

I've already said with most brokers the initial meeting is free, so putting my Sherlock Holmes hat on €200 is a bad deal.

sorry to be clear, €200 is the price of the consultation with a report and summary of pension plans matching my criteria

That the norm or usually payments made by commission?

Can I get pm-ed a few advisors in North Dublin/City Centre that you recommend please? Thanks

ANXIOUS

St1mpMeister wrote: »

sorry to be clear, €200 is the price of the consultation with a report and summary of pension plans matching my criteria

That the norm or usually payments made by commission?

Can I get pm-ed a few advisors in North Dublin/City Centre that you recommend please? Thanks

I'd be worried about that as well. If you get a report and you go with the recommendation they would be getting paid by the life office generally. So you should only pay if you bin the report in my opinion. Have you a ball park figure in mind?

St1mpMeister

ANXIOUS wrote: »

I'd be worried about that as well. If you get a report and you go with the recommendation they would be getting paid by the life office generally. So you should only pay if you bin the report in my opinion. Have you a ball park figure in mind?

Ball park figure for what? The retirement pension target?

ANXIOUS

St1mpMeister wrote: »

Ball park figure for what? The retirement pension target?

The lump sum.

St1mpMeister

ANXIOUS wrote: »

The lump sum.

Hmm thought I mentioned that already.

Lump sum will be the max I'm allowed to put in to get the tax benefit. 25% of salary for 2017.



Just to be clear regarding the Financial Advisor fees, the norm is to not charge for the meetings, but instead charge commission on the pension fees is that right?

If the person I'm talking to is charging €200 for the meeting but no commission is that a good deal?

Heres Johnny

St1mpMeister wrote: »

ANXIOUS wrote: »

The lump sum.

Hmm thought I mentioned that already.

Lump sum will be the max I'm allowed to put in to get the tax benefit. 25% of salary for 2017.



Just to be clear regarding the Financial Advisor fees, the norm is to not charge for the meetings, but instead charge commission on the pension fees is that right?

If the person I'm talking to is charging €200 for the meeting but no commission is that a good deal?

He might charge 200 and he might not receive any more commission but there will still be a lot of charges from the financial institution throughout the pension.

I doubt a truly impartial financial advisor will go through an initial meeting with you and research the market thoroughly enough to get you set up and ready to go for 200 euro to be honest.

Even then, he will send you to a broker/agent that can actually provide a pension who will then need to be paid also. Or if he provides it himself he will want a lot more o cam guarantee that.

Have a look at independent advisors and get a few quotes from them but I think it's going to be more expensive up front than you think.

I know it's a big decision and it's your financial future so you have to trust people, but do you not know anyone in the industry at all that can recommend someone to you?? Or a trusted family member?

St1mpMeister

Heres Johnny wrote: »

I know it's a big decision and it's your financial future so you have to trust people, but do you not know anyone in the industry at all that can recommend someone to you?? Or a trusted family member?

Nope, no one in the industry apart from you guys so hence why I was asking you to recommend someone (not south Dublin)

Any family member I know that has a pension got theirs through their company.


On a side note I came across this:

https://www.ccpc.ie/consumers/money/pensions/personal-pension-plans-and-prsas/

If you are employed, by law your employer must offer you a standard PRSA if:

There is no employer pension scheme in place through your job

Does this mean that all previous companies I worked for that had no pension in place were breaking the law??

Heres Johnny

Every company must give access to a PRSA so pension can be paid through payroll. No obligation to pay into it though or be in any way responsible.

But they can also offer occupational pensions too which they must contribute at least 10% of premium to and they become trustees of it. I set these up when I was a financial controller and they beat the socks off a prsa for benefits. Won't go into that here since you are looking for personal pension, which is different from a prsa by the way.

If you genuinely don't know anyone I can pm you names of some guys I know are good solid advisors from different companies and brokers that are around Dublin (Not sure if north or south though but think they are pretty mobile and you can talk to them on phone first) but they are definitely commission based guys but I'd recommend them for your initial chat to learn a bit since you seem to be apprehensive and then take it from there.

I honestly don't know any fee based advisors to recommend to you I haven't really come across many on my travels.

St1mpMeister

Heres Johnny wrote: »

Every company must give access to a PRSA so pension can be paid through payroll. No obligation to pay into it though or be in any way responsible.

But they can also offer occupational pensions too which they must contribute at least 10% of premium to and they become trustees of it. I set these up when I was a financial controller and they beat the socks off a prsa for benefits. Won't go into that here since you are looking for personal pension, which is different from a prsa by the way.

If you genuinely don't know anyone I can pm you names of some guys I know are good solid advisors from different companies and brokers that are around Dublin (Not sure if north or south though but think they are pretty mobile and you can talk to them on phone first) but they are definitely commission based guys but I'd recommend them for your initial chat to learn a bit since you seem to be apprehensive and then take it from there.

I honestly don't know any fee based advisors to recommend to you I haven't really come across many on my travels.

Cool, if you can PM me some of them I can take it from there.

Having a chat with an AIB advisor tomorrow just to get a start on the process and get familiar with the overall concepts.

Regarding the other "financial advisor" I've been talking to who would charge €200, it turns out he is an independent broker himself (I clearly didn't see that part on the website) and has two options for payment:

- Fee basis - €500 to run all reports, factfind, risk profiling, and policy application documentation processing

or

- Commission basis - all as above but the insurer pays a commission of 5% on the pension lump sum contribution to the broker (and he would waive any fees as the 5% commission would be more than €500)


Sound about right?


He did also mention
"Your typical annual management charge would be 1-1.25% per annum"

Again, those figures seem fair enough?



btw I'm asking these questions here just to save me hours of looking through many websites, it's nothing to do with me being apprehensive or not trusting

Henry Ford III

Heres Johnny wrote: »

Every company must give access to a STANDARD PRSA so pension can be paid through payroll. No obligation to pay into it though or be in any way responsible.

But they can also offer occupational pensions too which they must contribute at least 10% of premium to and they MAY become trustees of it. I set these up when I was a financial controller and they beat the socks off a prsa for benefits. Won't go into that here since you are looking for personal pension, which is different from a prsa by the way. Note 1

If you genuinely don't know anyone I can pm you names of some guys I know are good solid advisors from different companies and brokers that are around Dublin (Not sure if north or south though but think they are pretty mobile and you can talk to them on phone first) but they are definitely commission based guys but I'd recommend them for your initial chat to learn a bit since you seem to be apprehensive and then take it from there.

I honestly don't know any fee based advisors to recommend to you I haven't really come across many on my travels.

Note 1. You can insure life assurance and PHI under the self employed regime the very same as under an EPP. Different limits apply however.

OP needs to talk to an Authorized Advisor. See the Central Bank website for guidance.

There is no norm for fees/commissions. Everything must be disclosed though. Expect however to pay €150+ per hour. Any AA can write business on a 100% fee basis, or a full commission basis, or a combination of both. These costs are negotiable.

Heres Johnny

St1mpMeister wrote: »

Heres Johnny wrote: »

Every company must give access to a PRSA so pension can be paid through payroll. No obligation to pay into it though or be in any way responsible.

But they can also offer occupational pensions too which they must contribute at least 10% of premium to and they become trustees of it. I set these up when I was a financial controller and they beat the socks off a prsa for benefits. Won't go into that here since you are looking for personal pension, which is different from a prsa by the way.

If you genuinely don't know anyone I can pm you names of some guys I know are good solid advisors from different companies and brokers that are around Dublin (Not sure if north or south though but think they are pretty mobile and you can talk to them on phone first) but they are definitely commission based guys but I'd recommend them for your initial chat to learn a bit since you seem to be apprehensive and then take it from there.

I honestly don't know any fee based advisors to recommend to you I haven't really come across many on my travels.

Cool, if you can PM me some of them I can take it from there.

Having a chat with an AIB advisor tomorrow just to get a start on the process and get familiar with the overall concepts.

Regarding the other "financial advisor" I've been talking to who would charge €200, it turns out he is an independent broker himself (I clearly didn't see that part on the website) and has two options for payment:

- Fee basis - €500 to run all reports, factfind, risk profiling, and policy application documentation processing

or

- Commission basis - all as above but the insurer pays a commission of 5% on the pension lump sum contribution to the broker (and he would waive any fees as the 5% commission would be more than €500)


Sound about right?


He did also mention
"Your typical annual management charge would be 1-1.25% per annum"

Again, those figures seem fair enough?



btw I'm asking these questions here just to save me hours of looking through many websites, it's nothing to do with me being apprehensive or not trusting

Yeah I thought it would be more than 200 alright.
Be careful with annual management charge, it's the big one. You pay it 25 times if you are in for 25 years and once your fund is big, which it sounds like it is going to be, this charge can be big. It's a percentage of money you have in your fund. Not huge difference now when you have 15000 in it, but it will grow significantly and the AMC will be taken based on the fund value. Think of when you have 300-400k in there.
Anyway, I'll send you on the names in the morning you will get a feel for different commissions, management charges etc after talking to a few guys.
Historical growth is historical and not really relevant as hard as that is to believe but could be just a useful indicator as to how it might grow in future.

St1mpMeister

Heres Johnny wrote: »

Be careful with annual management charge, it's the big one.

How can I lower this charge? It seems pretty standard from what I can tell?

Heres Johnny

It's different from company to company and is the charge from the fund manager to invest your money and make it grow.
Also depends on the type of fund but I have seen from 0.4% to 2% depends on how much managing they take. 1 to 1.25 as quoted would be middle of the road.

St1mpMeister

Heres Johnny wrote: »

It's different from company to company and is the charge from the fund manager to invest your money and make it grow.
Also depends on the type of fund but I have seen from 0.4% to 2% depends on how much managing they take. 1 to 1.25 as quoted would be middle of the road.

Had discussion with AIB financial advisor (who deal with Irish Life)

Their fees are:
- 1% annual management
plus
- 3% of monthly contribution (so that 97% of my contribution goes into my pension).. perhaps my terminology isn't correct here, but nevertheless 97% of my contribution goes through.


Is 3% middle of the road too?

The J Stands for Jay

St1mpMeister wrote: »

Had discussion with AIB financial advisor (who deal with Irish Life)

Their fees are:
- 1% annual management
plus
- 3% of monthly contribution (so that 97% of my contribution goes into my pension).. perhaps my terminology isn't correct here, but nevertheless 97% of my contribution goes through.


Is 3% middle of the road too?

Sounds a bit steep to me, but you are paying for the banker as well as paying for Irish Life.

St1mpMeister

McGaggs wrote: »

Sounds a bit steep to me, but you are paying for the banker as well as paying for Irish Life.

What sort of price would I be looking at that wouldn't be steep?

Better off just going straight to Irish Life?

Zurich or Aviva better?

Henry Ford III

What are you prepared to pay for best advice?

Going to a tied agent is a poor idea. It's great if ILAC is the best advice, but imagine if they were the worst? AIB can only recommend them so you're guaranteed to get a poor deal.

The answer is going to a fee based authorised advisor. They can do a pension on a fee basis, or a commission basis, or any combination thereof.

No self-respecting AA will spend much time talking to someone in the hope of securing a fee. They aren't volunteers.

Going to an Insurer direct won't get you was good deal either. They'll advise you get a Broker, or talk to their direct sales people who are tied agents. See paragraph 2 above.

St1mpMeister

OK, so it was mentioned earlier that I should "go to a few financial advisors" to get recommendations.

This will cost me between €200-€500 a go, is there really that much difference between them that I need to drop €2000 talking to 4 of them to compare?

And again, I'm not qualified to compare them, I'd probably need advice on which advisor's deal is the best


I've found a guy that has many positive reviews... I'm assuming that's good enough to just go with?