Excutive Pension Setup & Management

Dave_D_Rave

Hi Lads,

I am a Umbrella Contractor looking to setup a executive pension fund. I suppose I have a few queries in relation to the setup and management of the fund.

I am looking for a financial advisor to setup the fund provide initial advice, and provide ongoing advise on a pay as you go basis ?

Does anyone know of any companies offering such services on a pay as you go model ?

Most companies seem to want to charge a annual managment fee which ranges from 1% to 2%

What Annual Managememt Charge were you expecting to pay?

The average in the market is circa 1.25%, and that's with advice.

Execution Only would be circa 0.75%

What initial and ongoing advice will you need?

Dave_D_Rave

Thanks the reply.

Well apologies if this sounds silly but I was looking to remove the annual management fee altogether.

I idea is that if I need advice on the fund ie every couple of years then I get it off a financial advisor on a pay as you go basis.

Is this flawed thinking this approach?

There are two parties to this transaction.

You're buying a product from a product provider and you're looking for advice from an advisor - both regulated entities.

The product provider is going to charge you for the product, its fund managememt and its administration.

The advisor is going to charge you for setting up the product and the advice on the provider (which one) , product (suitability) and fund/s to be invested in.

You'd probably pay a fee of circa €750 - €1,000 to the advisor for the set-up and inital advice. If you need more advice down the road then you'd pay more fees for that. A full financial plan at outset would be circa €2,000+.

There's always going to be an Annual Management Charge on the product as this is how the provider gets paid.

If the advisor used the fee model then it's likely that the AMC might be circa 0.5% pa.

If the advisor didn't operate a fee model then it's likely that the AMC would be 1.25% - 1.5% pa - he'd be obliged to give you advice any time you wanted it. On Executive Pensions there are no disclosure requirements so if you're going this route then ask for the full disclosure on charges/commissions in writing before going ahead. If you don't get them, walk away.

If you used an advisor/intermediary to buy the product on an execution only basis then your AMC would be circa 0.75% pa. And, no, you won't buy it at a lower cost by going directly to the provider. The intermediary would be the agent on the product for it's duration and would service any requests you might have or changes you need to make.

Mach 3

Hi Dave_D_Rave,

I was looking at going down the "excutive pension" line, until I seen that there is change in PRSA contributions this year.

From my limited understanding your company can contribute as much towards the PRSA as it sees fit without the age limit restrictions.

I don't know does this sway the benefits of a PRSA over a excutive pension.

Sorry to hijack the thread somewhat, but can I ask the more knowledgeable posters if this is the case?

@Mach 3

@Mach 3

The funding limits for executive pension are still very generous and would still be suitable for the vast majority of directors. There's an indicative Maximum Funding Calculator here https://www.zurich.ie/broker-centre/max-funding-calculator/. The age related limits are for personal contributions not company contributions made on behalf of the director/employee.

There are other subtle differences on comparing the two for a director. This https://www.standardlife.ie/dam/Global-blueprint/Geo-IE/BZ_IE/BZ_PDF/comparing-occupational-pensions-with-a-prsa.pdf is a handy guide but that company only do Non-Standard PRSAs so they're not going to tell you what I've put in my first line or that you'll probably be able to buy an Executive Pension with costs that are 25% less than a PRSA.

What a lot of people forget is that the product you buy now isn't for your pension life. You can change it if a better one comes along and pricing is getting more competitive.