Not All Pensions are the same!
Up to 90% of pensions we analyse are being overcharged management fees and placement fees!
Pension returns tend to be consistent over the economic cycle as Irish fund managers tend to invest in the same funds => therefore you should be demanding lower management fees in order to get a better yield on your pension!
If the financial turmoil since 2008 has served up anything useful to the Irish public, it has been the resultant remarkable increase in financial literacy amongst the general population.
The average taxi driver now knows the Irish sovereign 10-year bond rate and its significance, and is nowadays cautious if not downright sceptical when it comes to financial investment products.
What is remarkable however, is that if you ask the same Joe Punter how his own private pension is performing, you will invariably be met with a blank stare – for few people seem to have knowledge of well their pension pot is doing, how much they are paying in management fees/allocation rates and whether they are ‘backing the right horse’ with their hard-earned savings.
For many people it seems that once they cross the rubicon and start a pension, it’s ‘job done’ and they pay no heed to examining same subsequently until it’s too late.
What is more remarkable is that there are many custodians/trustees of company pension schemes (be they defined contribution or defined benefit) who have not sought an independent performance review of their funds – notwithstanding it may affect sometimes hundreds of people in their schemes.
So how is your pension doing?
Well to answer that definitively we would need to analyse your own particular policy circumstance (which we can do if you you complete the free review form below) but for now we can take a helicopter view of how Irish managed pensions have been performing very recently and in the last ten years.
First take a gander at the interactive chart below;
Well what is compelling of course is the headline 15.8% return over the last 12 months which is rather healthy indeed (especially when one considers the typical savings deposit rates currently). Of course when it come to pensions, most everyone knows that it is the performance return of the fund over many years that is a better indicator. For example Standard Life Investments may have had a good run over the Q4 of 2015 (and New Ireland less so), but if you look at this graph below, you will see that the Irish funds performance statistics tend to converge into a similar pattern.*
What lies beneath the data
These graphs do not provide the full picture as stated above and they are based on an aggregate of many funds under management with each institution.
More significantly, however, it is very important to note that there are wildly differing allocation rates and management fees being charged across different companies – depending on the fund-type, pensioner/trustee scheme and indeed the difference can simply be down to how skillful your financial broker is in negotiating on your behalf.
At Ocean.ie, we have examined many policies (including company group schemes during corporate change or redundancy) and we have seen annual management fees ranging from 0.5% right up to an eye-watering 4%! Some of the time the fees are justifiable, but in 90% of the cases in our experience, we have managed to either reduce fees or at least move the pension scheme into a fund which is more suitable in terms of risk/return and other factors.
In conclusion however, investing with one or other these established fund managers is probably the prudent choice especially where there are other people who are dependent on the outcome. However, for all the reasons above, getting an independent broker to bat for you should pay bigger dividends in the long run.
If you are are concerned about your own personal pension or if you are involved in overseeing a group pension scheme, Ocean.ie has a team of accountants and qualified financial advisers who provide an independent review service. You do not have to rely on occasional reports from your fund manager – we use our combined experience and analytical tools to determine if you are getting a fair deal.
You can use the pensions review forms below or use the quick enquiry form here or call (01)8693400
If you would like a quick check of your own personal pension, just submit this 2 minute questionnaire below and we can do a no-obligation quick review of same. Of course if you would like to start a pension, you have come to a good place too.