Retirees face losses of thousands on differing pension fund charges
Differences in pension fund charges can mean a loss of thousands of euros for individual pensioners, according to a new survey by the Pensions Council.
The survey examined charges across a number of Approved Retirement Funds (ARFs) taken out at retirement to provide pensions for the elderly. Six companies account for the vast bulk of the Irish ARF market - Aviva, New Ireland, Zurich, Standard Life, Friends First and Irish Life - and 23 separate products provided by that group were examined, the Pensions Council said.
The Council said that a pensioner investing €75,000 over 10 years might have saved up to €5,440 by choosing the fund with the lowest charges.
For an investment in the €150,000 region, a pensioner might have lost up to €11,700 - or nearly 8pc of the initial investment - by choosing the fund with the highest charges, it added.
"The survey results have one important lesson for consumers and intermediaries: shop around and compare all charges before choosing a particular ARF," the Pensions Council said.
The Pensions Council also points out that the kind of comparative pricing information in the report is not normally available to consumers or their intermediaries.
"It would be helpful if such information were made available on an on-going basis," they said.
"The survey provides a "snapshot" of charges at one point in time and charges may change over time. Furthermore, the survey did not cover intermediary/broker charges, which may be comparable to insurer charges."
The Pensions Council is a statutory body recently set up to provide advice to the Minister for Social Protection on matters relating to pension policy.
At its first meeting in March last year, former Social Protection Minister Joan Burton asked it to focus on charges and gender issues.
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