Friday, December 14, 2012

GR 131 - Arona to La Esperanza

Last week I travelled to Tenerife with the intention of doing 3 stages of the GR131 and another walk in the West of the island. The plan was to do Arona - Vilaflor and Vilaflor - El Portillo on the GR131 and Santiago del Teide - Buenavista del Norte (via Masca).

It didn’t work out that way. I decided to start in Vilaflor on Tuesday and head for El Portillo. This route would take in 2 stages of the GR131 by bypassing the 3.7km walk to/from Parador after dropping down from Degollada de Guajara.

I was sitting on the steps outside the visitors centre in El Portillo at 12:05. The bus wasn’t due until 15:15 so I decided to continue on to La Caldera.

As I had taken a big chunk out of the middle section of the GR131 on Tuesday I decided at that stage that I would just finish it on the remaining two days for walking. So, on Thursday, I again started in Vilaflor and walked ‘down’ to Arona and on Saturday I travelled to La Caldera to walk ‘up’ to La Esperanza.

The entire route is very well marked but I did stray from the track on 3 occasions. On two occasions I was about 50m/100m away from a marker and on one occasion I got totally distracted and ended up on the TF24 (about 14km from La Esperanza) and had to drop back down to the path. I did have Paddy Dillon’s book with me and found it very useful for additional information/markers.

I absolutely loved this walk. On one occasion (between Parador and El Portillo) I had to put on my gloves but, other than that the weather was great.

Bus starts from Los Cristianos (base) were 5:50 X 2 (to Vilaflor) and 6:10 (to La Caldera). Three different buses were required to get from La Caldera to Los Cristianos (& vice versa) and from La Esperanza to Los Cristianos. Travel times on buses, for longer journeys, were 2 to 2.5 hours.

Tuesday - 40km in 8 hours 15 minutes

Thursday - 20km in 3 hours 45 minutes

Saturday - 30km in 6 hours

Pace - Very Brisk ;-)

Wednesday, September 19, 2012

Rationalisation in the Life & Pensions Industry in Ireland

Last week Zurich Life announced (quietly) that it plans to close the Cork and Galway branches and is looking for about 70 voluntary redundancies. The company cites the continuous decline in the health of the Life & Pensions industry, since it peaked in 2007.

What’s surprising, is that it has taken 5 years to come to this conclusion and that there have not been similar occurrences with some of the other players in the market.

You see, I’d consider Zurich Life to be one of the better players in terms i) the product range they have to offer to the end consumer ii) their service and iii) a unique ability to listen to what type of product I want and try to deliver it.

There are two existing players that have basically single (okay) product offerings and I don’t know if their parents are going to plough money into the small Irish market at this time. Why would they? It’s a mess.

There are two others that I would find it very difficult to place business with based on past experience with service and crappy products. Standard Life wouldn’t be one of these.

The biggest operator is owned by the State and has just swallowed up Quinn Life. There’s a few boutique players flogging deposit based tracker bonds to death. Bank Of Ireland are ‘trying’ to sell New Ireland.

The only speculative conclusion that I can come to is that: now that Zurich Life have made a move some of the others will follow by letting folk go to reduce costs in an attempt to enhance profitability. Life & Pension companies in Ireland don’t like to be ‘first’ with crappy news so I’d expect a few of the others to come forward any day now and tell us how terrible things actually are in the industry.

Tuesday, August 14, 2012

Interview - Jerry Moriarty

What is the best business/investment decision you ever made?

Moving to the UK when I was 23, it opened up a lot of opportunities. Backing Galileo at 20/1for the 2001 Derby was very sweet too. Someone who worked with me had a friend who visited Ballydoyle early in the year and they said he was their best horse for that year.

What kind of car do you drive?

Mercedes CLK 200.

What is the worst financial advice that you ever received?

Not to join my DB scheme when I started working in the UK. Eventually did after a couple of years in the DC scheme.

Do you own property abroad?


Should basic finance be included on primary school curriculum?

Absolutely, we need to do a lot more to help people understand the basics.

Do you contribute to a pension plan?

Yes, we have a DC scheme at work and it's my main form of savings.

What's your favourite film of all time?

It's so hard to narrow down and I change my mind a lot. Today I would say Stand By Me.

Have you ever won money?

See No. 1. I am relatively lucky and have won my local GAA Club (Sneem, Co. Kerry) lotto.

Do you own your own home?

Not fully yet,but yes.

Do you invest directly in the stock market, through funds or both?

Not directly, but I do through my DC scheme.

What is your preferred method/system of saving (Deposits, Funds,Shares, Property)?

Short term savings through deposits. Long-term by paying off mortgage as quickly as possible and pension scheme.

What financial product/s do you consider to be bad value for money?

Anything that is sold as an add-on, insurance with electrical appliances. I wouldn't buy a washing machine from an insurance company so why the other way around,

Do you trust your bank?

To a point. I still need one though and always check transactions and statements.    

Jerry Moriarty is Director of Policy at Irish Association of Pension Funds

Friday, August 10, 2012

Danica Life (Ireland) - What to do?

Danica Life are exiting the Irish market. It will cease trading as a life insurance company here on 31st December 2012.

The current book of business will be transferred on 31st October to the parent company in Denmark. The exception to this is their PRSA business which will have to be transferred to another PRSA provider here in Ireland.

It appears that online access to policyholders accounts, who stay with Danica, will not be available after the transfer to Denmark.

The original service Danica offered was on an ‘execution only’ basis but it is now recommending that policyholders seek financial advice before they make any decision on surrendering or transferring to another company before the transfer date.

If policyholders have to get financial advice they will have to pay for this either by fees or by entry/exit charges on the ‘new’ products that they will be investing in.

If policyholders were able to navigate the Danica products on an ‘execution only’ basis ( ie no advice) originally, then I don’t see why they can’t do so again if they are transferring to other products here. If policyholders are in the market for this type of service then they might consider the following.

The Personal Pensions, Executive Pensions, Pension Retirement Bond and PRSAs can be purchased on a ‘no advice’ basis via . There are no entry/exit charges, no policy fees and there is a single annual management charge of 1%pa.

As for the Investment Bond, well that’s a bit more tricky because of the tax implications of surrendering the Danica plan as you can’t offset the loss on a Danica fund against another fund. However, if the gain/loss is only marginal and the policyholder is adamant about surrendering the Danica fund then they might look at what’s available via or . Both of these sites offer low-cost execution only products.

The Danica Life exit announcement also refers to Mortgage Protection and Term Insurance products that they may have sold. Again, the policyholder can change provider if they wish and I’d be surprised if they couldn’t get a cheaper policy in the Irish market. Caveat : if policyholders are switching providers, make sure that you have the new policy in place (on cover) before cancelling the old one.

Declaration of Interest : The above execution only sites are operated by the author.

Thursday, July 12, 2012

The Pensions Versus Savings Debate

The goalposts have been moved over the last few years in terms of the tax efficiency of pensions. Some reliefs have been reduced and  taxes have increased on the benefits that are being drawn down.

Tony Gilhawley of Technical Guidance Ltd., in partnership with Standard Life, have produced a technical paper on the issue titled 'To Pension or to Save...that's the question!', which is available here.

The answer? Well, it depends...

Whichever route you take, it may be worth your while investigating these Pensions or Savings products.

Both sites provide access to low-cost products on an 'execution only' service basis.

Tuesday, July 3, 2012

How your life insurance premium can increase by 1,384%

I’m currently dealing with a life insurance policy where the Life Company have carried out a ‘review’ of the premium and sum insured. They have decided that the premium needs to be increased by 1,384% if the persons insured want to maintain the level of life cover that’s on the policy, up to the next review date.

The policy was taken out 25 years ago and is what’s referred to as a Unit-Linked whole-of-life policy. The premiums on these policies are guaranteed for 10 years. They are then reviewed by the Life Company and they decide whether the premium, plus any cash value on the policy, is sufficient to maintain the level of cover until the next review date. After the 10 years, reviews are carried out every 5 years thereafter and annually after age 65.

The Life Company state that ..”unfortunately your policy has not been reviewed as scheduled.” My reading is that, they never reviewed it.

Monday, June 25, 2012

Specified Illness Cover - Financial Tip

As most of you will know, Specified (Serious) Illness cover pays out a lump sum if you are diagnosed as suffering from one of a number of specified serious illnesses (ie Cancer, Stroke, Heart Attack etc.), as defined in the product providers policy document.

If a ‘Critical Event’ happens (eg diagnosis of specified illness), then the insured must survive 14 days so that they are eligible to claim under the policy.

If you are in the market to buy this product, for a fixed level term, I would recommend that you buy the cover on a 100% ‘Accelerated’ basis.

This means that you insure yourself for Life Cover & Specified Illness Cover under the one policy, where the full sum insured is paid out in the event of your death or on a ‘critical event’.

The difference in premium between the ‘Accelerated’ & the Specified Illness policy only is very small and in some cases can work out cheaper. You also eliminate the 14 day survival period issue.

Tuesday, April 10, 2012

The Downward Spiral Continues

There isn’t a week that goes by where an Irish based Life & Pension company complains about the perilous state of their market. They are all in a ‘race to the bottom’ as they struggle with profitability and retention of business.

The Life & Pension market has nosedived about 60% since its peak in 2007. There is no way that anything like this number of regulated entities have exited the market since then. (I’m awaiting a reply from the regulator on the percentage increase/decrease since 2007.) So, where is their income coming from if there’s less ‘new’ business to go around? How can they all survive a decrease like 60%?

The dogs in the street know that there is a problem but no one seems to be doing anything about it, except complain. The only conclusion that I can come to is that the Life & Pension companies don’t think it’s their responsibility to change anything. If fact, there may be a mindset within the industry that is waiting for the regulator to ‘do something’.

The thing is, it’s not the regulator’s problem. The Life & Pension companies have created the problem themselves and it would not make sense for the regulator to intervene as, on the face of it, the consumer is benefiting from reductions in life insurance rates and enhanced allocation rates for pension/investment business.

As far as I am aware, Life & Pension companies have to submit annual figures on how many policies 'replace an existing contract, in whole or part', so the regulator should know what they’re looking at.

It may be that the Life & Pension companies want the regulator to say ‘your business model is doomed and you have to change it’. Of course, this would suit the companies as they could then ‘blame’ the regulator for insisting on change and save face with their broker/advisor market.

In the meantime, those who rewrite life insurance every few years will be rubbing their hands with glee at the prospect of rate changes (again) in December due to new gender equality legislation. ‘New’ policies means ‘new’ income. The downward spiral continues.

Friday, March 23, 2012

(Snap) Annuity Survey 21/03/2012

There are currently only three main players in the annuity market in Ireland. Irish Life, New Ireland and Zurich Life are the only companies that are actively competing for annuity business.

You may get a quote from Friends First, Standard Life or Canada Life and it may be worth bearing in mind that sometimes they might be competitive with their rates.

For the purpose of this post, I am limiting it to the three that are currently interested in doing business.

The maximum commission that can be paid to an advisor by Irish Life is 2% of the purchase price. New Ireland is 3% and Zurich Life is 2.5%.

Zurich Life €6,792.48 pa

New Ireland €6,774.60 pa

Irish Life €6,680.70 pa

Even though the commission rate on the Zurich & New Ireland annuities is assumed at 2.5% for the quote above, they are currently quoting higher rates than Irish Life with a max commission of 2%.

Buying the annuity directly from the pension provider will incur a commission charge. This will more than likely be 2%.

If you decided to buy the annuity on an ‘execution only’ basis (no advice) via a broker you could negotiate a lower commission or pay a fee to execute the transaction.

For the ‘execution only’ service available at the annuity payable per annum would be €6,938.52

Quote based on the following customer details:

Male 15/03/1947, Female 15/03/1952, €150,000, Guarantee period 5 years, Level annuity, Reversion rate 66.67%, Payable monthly in advance

Buying an Annuity - Options

If you have a pension fund maturing and you are in the market for an annuity, you should realise that there are options available in respect of how you buy the product.

The pension company that has been managing your fund will probably offer you an annuity rate but you are not restricted to taking this. You can shop around for the best rate that is available on the market.

If you need advice on the best annuity provider or on the options that may be available on the product, then you are going to have to pay for this advice. In the vast majority of cases this is paid for by commission from the annuity provider to the advisor. Commission rates vary in Ireland from 0% to 3% of the purchase price.

If the commission rate is 0% then you will obviously pay a fee to the advisor for his/her work on the advice you receive and in the placing of the product with the provider. The larger your pension pot, the more likely that the fee method of payment will suit and you should negotiate the fee with the advisor.

As an alternative, you can also buy an annuity via an ‘execution only’ service. You will not receive advice on which provider is the ‘best’ or on the options available under the contract but you will receive an annuity rate that will be enhanced because the cost associated with the ‘advice’ has been eliminated.

The ‘execution only’ service is suitable for retirees that have a good understanding of their financial needs and that can analyse the merits of a particular product or provider.

So, if you’re in the market to buy an annuity you should explore which purchase route suits you and how you are going to pay for the service provided. Remember, the annuity is for the rest of your life so any discount on charges will benefit you until your demise.

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Decumulation Strategy

We spend most of our working lives trying to accumulate pension assets that will generate an income for us when we stop working. We spend a lot of time thinking how best to do this. Unfortunately, for most of us, it is only when we are faced with a retirement date that we start to think about decumulation ie. converting pension assets into lifetime income.

In the pre Approved Retirement Fund (ARF) era this was pretty straightforward. You elected to take as much tax-free-cash as you could and bought an annuity with the balance. That didn’t really need a decumulation strategy if your pension fund was your only retirement asset.

Today, we have ARFs, Annuities and Vested PRSAs to choose from in the post-retirement pension product market. All of these products have their merits. Depending on your financial circumstances and attitude to risk, choosing a single product may offer the best solution for you.

However, the multiple-product solution is something that you should spend a bit of time researching. Rather than leave it till the week/month that you retire to devise a strategy, why not do it now.

Thursday, March 1, 2012

Current Annuity Rates

If you, or someone you know, has a pension maturing and they are in the market to buy an annuity then they should put a bit of effort into searching for the best rate currently available.

A quick survey today of the annuity rates available from the players in this market tells me that the best rate is 15.5%* higher than the lowest one. That adds up to a lot of money over the lifetime of the annuity payments.

(* Based on a joint life annuity for a male 65, female 60 incorporating a 5 year guarantee, level, payable monthly in advance with 2/3rds spouses pension.)

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