We can help you:
Why review your pension:
We can help you:
Why review your pension:
Client Case Study
Name | Audrey
Age | 41
Audrey came to Pension Support Line after finding our website online. She had seen a video we made regarding pension fees and charges.
She was worried that the private pension she had been paying for the past 5 years and how it might be affected by potentially high charges.
After a full pension review, Audrey was able to drop her charges from 1.5% to 0.25%. Although it may not seem like much, with Audrey planning to contribute to her pension for the next 25 years this would have had a dramatic impact over time.
For example, if we take someone who plans to contribute to a pension for the next 20 years at €300 per month, allowing for an investment return of 6% and an annual management charge of 1%.
|Contribution per month||€300|
|Number of years||20|
|Annual Investment Return||6%|
|Annual Management Charge||1%|
|Total Fees & Charges over 20 years||€12,953|
Client Case Study
Company Pension Scheme
Organisation X is a manufacturing company based in Dublin. They had set up a company pension scheme for 4 years but have not had it reviewed.
They approached Pension Support Line as they were unsure as to how the scheme was performing and had not been receiving regular correspondence.
Following an in-depth report by an advisor, it was decided the scheme could perform better with some adjustments to both the provider along fund choices.
These changes led to the scheme performing better as a whole but also employees receiving regular updates as well as annual reviews.
The change led to more employee engagement with a further 10 employees joining the scheme since the change.
If your situation is similar to either of the above and you would like to assess your options, feel free to contact our team.
How well is your current pension performing?
This should be a relatively simple question to answer. However, many people who contact us initially struggle to give an accurate response.
Following a pension review, 68% of our clients decide to change their fund choice or investment strategy.
Just having a pension plan in place does not mean your future is financially secure.
However, a good advisor and regular reviews of pension performance can go a long way to financially protecting your future. Before contacting us, most of our clients knew they had a pension but had no idea of how it was performing.
If you are not aware of how your pension is performing, how are you supposed to plan for retirement?
We work alongside a team of experts who can help you get the advice you need.
We are different.
The advisors we work with take a non-jargon, unbiased approach to pensions. We have taken the time to breakdown some of the questions clients ask us.
Table of Contents
It can be a challenge to keep up to date with how your pension fund is performing. We work alongside a team of fully Qualified Financial Advisors with a wealth of experience who can help you invest your pension in the right funds in line with your goals and attitude to risk. Our team will provide you with a full pension review.
Life brings many changes along the way and consequently, our lifestyles and attitudes to risk also changes. It is important that your pension is invested to align with your expectations about your lifestyle and that your money is working effectively for you.
What is a pension review?
This is where you have the opportunity to have your current arrangement reviewed. As with any investment, there is potential your fund may go down as well as up.
A pension review will allow you to analyse your fund’s performance in recent years. You can also get an overview of the market and discuss how your pension has performed compared to others.
This will also allow you to review your scheme rules and look at potentially accessing your pension from a certain age. Some schemes are accessible from age 50 onwards in certain circumstances.
Our pension review process
Our team can guide you through the process step-by-step. During your review process, the advisor may look at the following:
Our team always takes a holistic approach when it comes to looking at your financial situation.
Why should I have a pension review?
Most of us do not want to rely on the State pension when we retire. Well, ideally, I would not like to live on €248 a week. You probably were not aware it was that low…
Having a solid pension plan in place will allow you to live the lifestyle you deserve in retirement. The only way to ensure you have the amount you would like is with regular reviews of your current arrangement.
You need to ensure you are maximising your investment. You also need to understand the charges associated with your pension. These can differ from broker to broker so you must check.
If you are in doubt about any of the above either contact your broker or ask us to put you in touch with an advisor who can help.
How is your pension performing?
Are you one of the many people who receive their annual pension statement through the door and decide to file it away without trying to decipher it?
It may look as if it is written in a foreign language, but it is important that you understand what it means. Depending on how long you have until retirement, your investment fund choices may need to be adjusted.
Are you aware of how your pension is being invested?
Depending on what type of pension arrangement you have, you can choose as to how your fund is being invested.
For example, if you start a Personal Retirement Savings Account (PRSA) with one of the major life companies, many will choose a split investment.
Often brokers will advise such split to spread risk and ensure a diverse investment. Again, the closer you get to retirement, the more important it is to look at your attitude to risk and where your fund is invested.
Do you know what funds your pension can be invested in?
Most of us that have a pension know it is invested but have no idea how or where.
We leave it in the hands of the professionals and rightly so. However, it is important you understand how your money is being invested.
You probably receive your ‘Annual Benefit Statement’ every year but just look at the overall amount and do not dive any deeper.
Pension funds are invested into what is referred to as asset classes.
The main asset classes for pension funds are:-
These are shares in companies. They are bought and sold on the stock market.
This often includes commercial property such as offices, industrial & retail premises.
These investments will earn short-term interest and have ease of access.
These will usually be split into Corporate Bonds & Treasury Bonds (Government).
These are selected as the aim is to receive a higher return over the longer term while keep risk to a minimum.
If you are unsure as to how your pension is invested but would like to know more, book your complimentary consultation.
European Union Risk Rating
European Union law requires that all life companies use a scale that indicates the level of risk for each of their funds.
Here we have designed a graphic to illustrate how these scales operate.
In Ireland, this scale ranks from numbers 1-7. This helps investors to compare the risk associated with various funds.
However, it is worth noting one thing. Although the numbers used are universal, companies may take different factors into account when gauging volatility and risk.
This is why it is vital you consult an expert who understands your risk profile and attitude to risk.
Our risk profiles often change with age so it is something that should be reviewed.
Do you know your current management fees?
Your pension fees, depending on their rate, can have a significant impact on the potential future value of your pension.
Often, many of us are overpaying on fees and this has a negative impact long-term.
Below are some of the terms you should become familiar with:-
- AMC– This is the Annual Management Charge is charged by the life insurance company to the policyholder. This fee will be based on a percentage of the total fund value. For example, .25%.
- Allocation Rate – This is the percentage of your fund that is used to buy units in your chosen fund. In simple English, not every penny you contribute may actually be used to buy units. For example, if you invest €100 and the allocation rate is 98%, the life insurance company will invest €98, not €100.
- Policy Fee – This is the fee charged by the life insurance company. For example, this may be €5 per month.
It goes without saying that understanding all the above is hugely important. Over a long period of time, these charges can accumulate and have a dramatic impact on your fund.
If you are unsure how your fund is being managed or would like to review any of the above, book a complimentary consultation with our team.
Case Study Example - Fees & Charges
Let us look at a practical example of how fees & charges can affect your pension fund.
We will take someone contributing to their fund over a 30-year period. We will also assume both will receive a 100% allocation rate.
|Policy fees (annual)||€60|
|Policy fees (annual)||€0|
|Total cost of fees & charges||€65,011|
It is worth noting, the above should not be taken as advice. Amounts will vary due to income tax brackets along with other variables.
What pension types can be reviewed?
Depending on what type of employment you are in, you may have a particular pension type. Two schemes we are going to look at are:
DC – Defined Contribution
These are occupational pension schemes are where both you and your employer have contributed. For example, you both contribute 5% of your salary to a combined 10% total.
The total amount in the scheme available to you on retirement will depend on a combination of three things. How much you contributed, tax relief, and how well the fund performed.
DB – Defined Benefit
Defined Benefit are also occupational pension schemes. However, they differ from DC schemes as they provide a set pension at retirement.
This set amount is usually calculated with the individual’s years services and earnings are retirement considered.
If you have left or become a deferred member of a DB scheme, you could potentially be entitled to a transfer value. A change in Government legislation in 2016 extended and gave more options to former members of occupational schemes.
Why is it important to review my pension?
If an occupational pension scheme is not an option, you may want to find your arrangement. You must look at your options. There are different types of private pensions such as:
- Personal Pension – This is suitable if you are self-employed, or if your employer does not offer a pension.
- PRSA – A Personal Retirement Savings Account is a simple pension arrangement you can take out regardless of you are employed or unemployed ( tax-relief not available if unemployed). Visit www.revenue.ie for more information.
- Executive Pension – This arrangement is suitable for company owners & directors.
This can be a little overwhelming. Therefore, you should recruit a qualified advisor when assessing your options.
How often should I review my pension?
Your pension is no different from any other investment and it is best practice to review annually.
We know life can throw a curveball at us and things can change quickly. This means that your attitude to risk may also change.
Having regular reviews of your pension with your advisor will ensure that your pension is always invested with your attitude to risk front of mind.
We know as pensions are longer-term investments it can be easy to forget about them. However, this is a risky strategy, and a simple, annual meeting means you can keep on top of things.
Will starting a new pension plan cost more than an old one?
Fees and charges differ from scheme to scheme. Brokers may also charge different commissions. It is important you are aware of both and there is transparency upfront.
This is where having an experienced financial advisor is vital. They will be able to breakdown any charges or commission structures. It is worth noting that you should expect some changes.
You would not expect a doctor or dentist to be free (well maybe not a good one) so an experienced financial advisor is no different. We work alongside some of the best in the industry and would be happy to put you in touch.
Can I combine multiple pensions?
Yes. However, only if it is the correct decision for you in that situation.
Although it might seem like the obvious choice to put them all into one pot, be careful before doing so. Our team of advisors has an agency with all the major life companies and can explain this process.
They can look at your different arrangements and help decide on an approach that will best suit your needs.
Can I receive tax relief on pension contributions?
You are entitled to receive income tax relief on your pension contributions.
However, these contributions are subject to certain limits. These limits have age-related thresholds and there is also a limit on total earnings eligible for tax relief.
|29 or younger||15% of net relevant earnings|
The maximum amount of earnings considered for calculating tax relief is €115,000 per year.
Who are the best Irish pension providers?
There is no one-size-fits-all ‘best’ provider in the Irish market. Several major life companies offer extremely competitive products.
The advisors we work alongside have an agency with all the major life companies in Ireland. Therefore, you will have a choice of the market.
Contact our team to have experienced advisors walk you through the process.
From what age can I access my pension?
Most pension arrangements can be accessed early under certain circumstances.
- Occupational Pension Scheme – 50 + with employers and trustees consent.
- Personal Pension Arrangement – 60+
- Personal Retirement Savings Account (PRSA) – 50+
Are there free pension review services available?
As we said, we offer a free, no-obligation chat with a financial advisor. If you do decide to take action on whatever that may be, there may be some charges involved.
However, anything surrounding fees & charges will be transparent and you will be made aware.
As with anything in life, you may have to pay for expertise but often it works out cheaper in the long run.
Book your free consultation here today.
Phone: 01-890 3518