Pension Fund Fees
Fees make up a massive part of what happens with your pension fund. At DW Financial we regularly meet clients who are paying well above the average on fees and this has a negative affect on their potential future fund value.
Here is a list of some of the fees associated with pension policies:
- AMC – An AMC or Annual Management Charge is a fund-based charge, charged to policy holders by the life company. The fee is based on a percentage of the fund value and you can expect to see AMC’s of in and around 1% but unfortunately we have found cases of clients paying up to 2%
- Allocation – When you contribute, for example, €200 per month in to your pension fund you would expect that all of that €200 actually goes in to your pension. Unfortunately, this isn’t always the case. If you have an allocation ratio of anything other than 100% some of your monthly premium is being absorbed as another needless fee.
- Policy – a policy fee is a fee charged by the life company. We have seen cases where the policy fee could be as high as €5 per month but more recently have seen certain life companies reduce or remove these fees altogether.
At DW Financial we will find the best fee structure available to match with your desired fund. Below is an example of just how much fees can impact your funds future potential value.
We recently met a 37-year-old woman that was contributing towards her retirement. She had been saving €500 a month in a pension fund for the last three years and had accumulated €26,104 in her pension fund. Before our review her pension had the following fees:
|Policy Fee||€4.92 per month|
Based on these fees, continually paying €500 per month until 65 with annual return of 4% this fund had the potential of returning €283,638
After our review, by switching provider we were able to offer the following fee structure;
|Policy Fee||€0 per month|
Based on these fees, continually paying €500 per month until 65 with an annual return of 4% this fund had the potential of returning €319,283.
By switching this client to a better fee structure, she was saving €35,645 in fees!
Book your free pension consultation today!