Are PRSA returns similar to the average pension scheme?

Tusky · 02-08-2023 2:14pm #1

Hi folks,

I'm looking for some information on PRSAs. I didn't know they existed until recently, and just found out that if an employer does not offer a pension scheme it is legally required to facilitate paying into a PRSA.

My question is this - are the rates of returns on a PRSA similar to employer pension schemes offered by the likes of Zurich or Irish Life etc? Would someone be losing out by transferring a pension pot from previous employment into a PRSA (to keep everything in one place) or are they similar?

I intend to seek professional advice on this but just looking for some information at this point.

Thanks!

Geuze · 02-08-2023 3:35pm

PRSA versus company DC schemes does not affect the returns

The returns are affected by the underlying assets that are purchased.

The PRSA or company scheme are just the wrapper.

One advantage of the company scheme = possibly lower fees, due to economies of scale.

Also, the employer might pay the scheme fees.

Geuze · 02-08-2023 3:36pm

For example, PRSA and company scheme both buy units in Zurich ABC fund.

The performance depends on the ABC fund, not on the vehicle or wrapper that holds them.

Tusky · 02-08-2023 4:01pm

https://www.boards.ie/discussion/comment/120930812#Comment_120930812

That's very helpful, thanks. Are most PRSAs offered by AIB, BOI, Zurich etc similar then? Or do some have advantages over others?

Geuze · 02-08-2023 10:43pm

All pension providers offer PRSAs.

New Ireland

Irish Life

Zurich

etc.

The fees charged can vary by the sales channel: direct sales, broker, etc.

PRSA fees are regulated to some degree, but lower fees are available, depending which broker is used.

03-08-2023 8:17am

The typical Annual Management Charge on a PRSA is 1% pa (but that's coming down recently)

If the PRSA is 1% and the Occupational Pension Scheme is 1% (assuming no contribution charge or other charges/fees) then the PRSA may be better value. It depends on the fund/s you want to invest in.

For example, Prisma 4 is a popular multi asset fund in the Zurich range. If your AMC is 1% on (RACs/EPPs/BoBs/ARFs or Occupational Pension Schemes) then the Other Ongoing Costs associated with the fund are 0.07% bringing your equivalent TER to 1.07%

If you invested in this fund via a PRSA then the the TER is 1.02% as OOC is only 0.02%.

Why? Because there are separate rules around third party costs that can/can't be passed on to PRSA plan holders.

So, return on PRSA is going to be greater with same company, if AMCs are the same.

Are PRSA returns similar to the average pension scheme?

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