Tuesday, October 20, 2009

Switching or Changing Pension Provider

If you are thinking of switching/changing your pension provider because you are none too happy about the level of charges on your product, consider the following:

If a person saved €1,000 per month (index linked at 3%) from the age of 30 to 65, the estimated retirement fund at 65 would be €1,472,823. This assumes that there is a 5% contribution charge on each payment made, the annual management charge is 1.5% and the fund grows at 6%pa.

Using the same details for contribution,term and growth rate, but having an annual management charge of 1% and no contribution charge, the estimated fund would be €1,673,568.

That's over €200,000 in potential savings. Is that a good enough reason to change?


Pat Quirke said...

Very few people know this, so well done for pointing it out.
We all look for value in everyday things, but a lack of understanding in financial matters means a lot of people get ripped off by smooth-talking salesmen.
Great work Ger, keep up the fight for fairness!

Gerard said...

It's not the first thing that is mentioned when you go to set up your pension, but it should be.

Alot of folk focus on the benefits and features without paying too much attention to the price/cost.

People need to be more proactive about what exactly they are buying but that means doing additional research.