Is your company pension scheme fit for purpose?
As a pensions broker serving the major Irish providers, we have been unhappy for some time with the old fashioned and inefficient pension contracts which are still very common in the Irish Pensions market. We felt that the providers have been very slow to change and that employers and their employees were not being served very well.
For this reason, we undertook a review of all group pension contracts available currently to establish which ones offer the best value and the most flexibility for our clients*
If you are in pension scheme or want to start a pension check out this online questionaire below
7 REASONS WHY YOU SHOULD REVIEW YOUR PENSION OPTIONS NOW
1. Poor Investment Performance
Most investment managers have delivered very poor investment performance with their standard Managed Funds failing to out-perform deposits over the past decade.
However, not all managers performed this badly and it is very important to research the market carefully so that these trends can be identified.
2. High Fees
A lot of group schemes have unnecessarily high charging structures in the following areas:
- Annual Management Charges
- Low Allocation Rates
- Excessive Trusteeship Fees
- Excessive Administration Fees
- Bid/Offer spread fees
- Policy Fees
- Pension Board Fees
All these will and do have a huge impact on each members’ eventual pension pot come retirement.
3. Poor Levels of Service
Many of the the main institutional providers struggle to service their group pension clients very well and the standard of day-to-day administration services from the majority of them is well below par.
4. Complicated Structures
Quite a number of so-called group pension schemes do not provide genuine group benefits for the scheme members but instead provide risk benefits on an individual basis with the charges being deducted from the member’s fund value every month.
This is very inefficient, very expensive and can result in member’s benefits being restricted for medical reasons. A genuine group risk scheme rarely has any of these difficulties.
5. Lack of Flexibility
If your risk benefits are included in your main pension scheme contract, it can become very inflexible. If you wish to replace your risk benefits insurer, it is much more difficult if the entire scheme is contained within the same insurance policy. In our view, it is much better to keep your risk benefits in a separate contract.
6. Little if any transparency
Again, with a lot of group schemes, the lack of transparency in member communications within the scheme plays a key role in members not knowing exactly what they are paying into.
Most members surveyed didn’t really know anything about their pension or risk benefits at all which lead to a lot of confusion in the event of a member either leaving or retiring from the scheme.
This needs to be eradicated insofar as all member communications and annual benefit statements are explained in plain English so as the member has a firm knowledge of the following;
- what exactly the pension is,
- how it works, what it covers,
- what investments they are in,
- how these investments have performed,
- charging structures relating to their pension,
- clearly defined investment projections so as the member has idea of what they can expect to receive at retirement,
- Risk Benefits attaching to the scheme in situations of Death in Service or Loss of Income due to illness or injury.
7. Where are the annual performance reviews?
Most if not all schemes fail to provide or offer an annual review for their members in fact most members will probably not look at that their pensions until they leave service or retire.
By that stage it usually to late to do anything if their pensions haven’t lived up to expectations.
It is of vital importance that members review their pensions at least once a year so as to keep up to speed with how everything is going within their existing set-up and to make sure that there are no surprises in store for them in the future or at retirement.
Contribution levels, Investment choice, Tax relief entitlements, Salary changes, Occupation changes, Personal changes (age, marriage, children etc.) will all need to discussed and will come into play throughout the different stages of the members working life and will have to be reflected in their pension decisions and outlook.
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 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. Contact Philip Doyle or Terry Palmer on 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.