How do I compare these?

Dingle_berry

I'm looking at AVCs. Two different companies offering two slightly different costed plans:

First one is a one off set up fee of €500 over the first year, 2% allocation fee off everything that goes in and a 1% annual fund management fee. The 1% decreases once a certain deposit/balance fund total is reached.

The second one has a 14% allocation fee which eventually drops to 4%. Management charge is 2.75% dropping to 1% at the end. This one claims to give a 5% bonus at the end once you've been condributing for 10 years or more.

So the first one seems to cost far less? How do I figure out if the 5% bonus from the second one is worth the higher cost? And is it worth the risk as it is subject to "policy conditions"?

coylemj

Those are shockingly high charges. Is that the best your employer can come up with?

The first option sounds like you are funding the sales guy's pension all on your own - 2% 'allocation fee' sounds like never-ending sales commission to me as its on top of a 1% management fee. And how does it cost €500 to 'set up' an AVC?

Dingle_berry

Haven't got a clue to be honest. These are personal retirement savings, additional to pension. Only 3 companies allowed, have yet to find out who the third one is

coylemj

Who are the companies offering these plans?

Heres Johnny

Statement of projection.
Same premium.
Same retirement date.
Same assumed growth rate.
Highest projected return keeping all the above the same means lowest charges.

But also look at the funds they are proposing to invest you in.

Geuze

These fees are very high.

Why not get a PRSA-AVC?

1% AMC, and 100% allocation

see here:

www.labrokers.ie

coylemj

Geuze wrote: »

Why not get a PRSA-AVC?

You might be able to get a product that's marketed as an 'AVC' but unless your employer is on board, you won't be able to get deductions made via the payroll so you will have to pay the gross contribution from your net pay and claim the PAYE back at the end of the tax year i.e. in January of the following year.

The convenience of having an AVC deduction made from gross pay so you get the tax benefit straight away can only done if your employer signs up with the pension provider.

Dingle_berry

Thanks for the replies.
Not sure if I can name companies on the forum?
What's the difference between a PRSA and AVC? Would it be the salaries /payroll dept that keeps a list of companies they work with or the HR pensions officer?

Geuze

coylemj wrote: »

You might be able to get a product that's marketed as an 'AVC' but unless your employer is on board, you won't be able to get deductions made via the payroll so you will have to pay the gross contribution from your net pay and claim the PAYE back at the end of the tax year i.e. in January of the following year.

The convenience of having an AVC deduction made from gross pay so you get the tax benefit straight away can only done if your employer signs up with the pension provider.

Yes, you would have to claim the tax relief yourself.

But you would not have to wait until end of year.

Once the policy is set up, the pension company issue you with a cert to send to Revenue, then your tax credits are adjusted.

So a 1 month wait, rather than end of year.

Geuze

Dingle_berry wrote: »

Thanks for the replies.
Not sure if I can name companies on the forum?
What's the difference between a PRSA and AVC? Would it be the salaries /payroll dept that keeps a list of companies they work with or the HR pensions officer?

A PRSA can act as an AVC.

The J Stands for Jay

Dingle_berry wrote: »

Thanks for the replies.
Not sure if I can name companies on the forum?
What's the difference between a PRSA and AVC? Would it be the salaries /payroll dept that keeps a list of companies they work with or the HR pensions officer?

Name and shame. I'm shocked and appalled at those charges.