Pension Charges Question

Catglee

Recently did some changes with respect of my broker, moving it into a friend's brokerage.
He mentioned the charges etc being applied are as good as I'll get and I got the impression that a favour was been done for me... Im quite ignorant on such matters, can I get opinions please.
What in particular does the phrase in italics mean?


"The gross allocation for this premium on a base annual management fee of 0.50% is 101.5%.
Zero% commission charged by the broker"

Geuze

Allocation rate = how much of you monthly premium is actually invested, the balance taken in fees.

Example: 98% allocation rate, 2% taken in fees.

PLEASE NOTE: brokers can and do offer different allocation rate for the exact same life company product.

By this I mean an assurer like Zurich lets brokers mix and match fees / allocation rates.


Allocation rates over 100% are possible.



(2) Annual Management Charge AMC - how much fee is taken each year, from the total fund.


A possible PRSA pension in Ireland is 100% allocation, 1% AMC.

Geuze

Catglee wrote: »

"The gross allocation for this premium on a base annual management fee of 0.50% is 101.5%.
Zero% commission charged by the broker"

On the face of it, this seems very good, even too good to be true

101.5% allocation means you 100 euro premium becomes 101.50, so you are receiving 1.50 from the assurer each month.

PLUS you pay just 0.50% AMC.

These are very low prices/fees.


I would post your query on AAM, they will know more over there, some brokers post on AAM.

Make sure to use a specific and precise thread title on AAM

Henry Ford III

Some post here too.

If it says it's a nil commission contract it won't get any cheaper than that - it's lower cost than the discount brokers.

Catglee

Catglee wrote: »

"The gross allocation for this premium on a base annual management fee of 0.50% is 101.5%.

What does it say on the Policy Certificate that was issued by the product provider?

The J Stands for Jay

Geuze wrote: »

On the face of it, this seems very good, even too good to be true

I wouldn't say it's too good to be true, it's common enough to see that sort of charge on contracts without the broker taking commission. The other side of it is that the broker needs to be paid, either a fee or by getting other commission based business from the customer.

Geuze

McGaggs wrote: »

I wouldn't say it's too good to be true, it's common enough to see that sort of charge on contracts without the broker taking commission. The other side of it is that the broker needs to be paid, either a fee or by getting other commission based business from the customer.

Interesting, thank you.

So if you pay a fee to broker, and broker agrees to no commission, then over 100% allocation, and 0.5% AMC are possible?

Henry Ford III

Geuze wrote: »

Interesting, thank you.

So if you pay a fee to broker, and broker agrees to no commission, then over 100% allocation, and 0.5% AMC are possible?

Yes.

There's an incorrect perception that the commission route is always poor value. Believe me on generally smaller ticket stuff and bearing in mind all the compliance and advisory and servicing requirements it can actually be very good value.

A good broker will be open to discussing either method of payment, and don't forget full fee/commission disclosure is mandatory.