PRSA AVCs for Public Service Employees

PRSA AVCs are Additional Voluntary Contributions made through a Personal Retirement Savings Account.

PRSA AVCs are a convenient method of funding for additional retirement benefits for the following reasons.

• Give you control over your choice of funds and provider
• Valuable tax relief is available
• Potential for a larger tax-free lump sum at retirement
• Access to an ARF/AMRF at retirement
• PRSA AVCs are easy to understand and easy to set up
• PRSA AVCs could help you retire early

 

Scope to make PRSA AVCs and maximise your retirement benefits.

You can make PRSA AVCs if the benefits that you will receive at retirement from your superannuation scheme and any benefits retained from previous employments, are projected to be lower than the maximum allowed by Revenue.

The following are examples of where there will be scope for providing additional benefits:

• Missing Years

If you do not expect to have full service, you could use PRSA AVCs to make up part or all of the difference between the maximum allowable tax-free lump sum and the tax-free lump sum based on shorter service.

Likewise, you could use PRSA AVCs to bring your pension up to the maximum allowed by Revenue.

• Non-pensionable Earnings

If you have non-pensionable earnings (e.g. overtime) you could use PRSA AVCs to fund for a pension based on your total earnings.

• Social Welfare Integration

Class A PRSI contributors have their pension benefit reduced to take account of their eligibility to receive the contributory retirement pension (single rate). The shortfall between the resultant pension and the maximum allowable pension under Revenue rules can be made up by PRSA AVCs.

• Spouse’s Pension (Death in Retirement)

The amount of spouse’s pension that can be provided is 100% of the maximum member’s pension. Your superannuation scheme provides a spouse’s pension of 50% of your pension.

• Additional Member’s Pension

The Revenue maximum pension is 2/3rds of remuneration reduced by the pension equivalent of the lump sum. This maximum pension after lump sum could be as high as 60% of remuneration which leaves significant scope for PRSA AVCs in the public service, where the maximum pension is 50% of pensionable pay.

PRSA AVCs, taken out for any of the reasons highlighted above, can be used to offset the effect of these reductions.

PRSA AVC's are a tax efficient means of saving money.

You can purchase a PRSA AVC with Zurich Life with no contribution charge (100% of your money is invested) and a 1% annual management charge through www.prsa.ie  

This service is on an ‘execution only’ basis.

The Destruction of the Irish Savings Market

The Irish Government campaign to discourage people from saving must come to an end. 

Regular savers to unit linked (fund) investments have really been maltreated and hounded. Not happy with the Government 1% Levy (Tax) on every contribution to a long-term unit linked saving plan, the current Government Exit Tax on any growth on the funds is 41%. Think about that. It's HUGE.

You're trying to be prudent, saving for the future, taking a risk on your investment and you get hammered on the growth in value. It's mind-blowingly stupid and short-sighted for a Government to maintain an obscene high tax regime on long-term savings. Of course, Governments think in 5 year election cycles so having a plan that goes beyond that short term is a collective anathema.

You can currently get a 'safe' tax-free return of 25% over 10 years (this was 47.5% in 2010 when the bond was introduced) by lending money to the Government via the Solidarity Bond. To get an equivalent current return from a product with a higher 'risk' insured investment fund, the fund would have to grow by about 55%, when you take annual management charges and taxation into consideration.

If we roll the clock back over the last 10 years and look at the SuperCapp Fund with Zurich Life and the With-Profit Fund with Standard Life we can see how difficult it is to compete with a Government sponsored product.

The gross return on the Standard Life Fund over 10 years, to February 2016, is 33.07% - deduct tax @ 41% and you're left with 19.51% net. The person that sold you the product got paid, the fund manager got paid, the Government got paid, but you're left with a paltry return on investment.

The figures for the Zurich Life SuperCapp Fund are a healthier 47.54% gross and 28.05% net. 

What needs to happen is that the Government need to get rid of the levy on these products and reduce the tax rate dramatically  OR introduce a tax efficient scheme like the Individual Savings Accounts (ISAs) in the UK. These allow individuals to save/invest Stg. £15,240 per annum in a variety of tax-free products.

If this doesn't happen, regular savers will be lured back into investing in property again, as the alternatives are so unattractive.

Given the way the Government have raided pension funds in the past and the current prohibitive tax regime on savings, there would want to be some reassurances from them on keeping their mitts off any surprise attacks on savings in the future.

The best person to save for the rainy day is you. So any talk of the Government setting aside a 'rainy day fund' is just nonsense. They'll just blow it, in time.

  

Price Matching - Consumer Obfuscation

You know when you ring your car/house insurance company and tell them that you have secured a cheaper quote, than their renewal, and they tell you that they will match the cheaper quote if you stay with them? Well, that's price matching and consumers are complicit in its growth as a way for insurers to gain and retain business.

It has slowly, but surely, made it way into the Life & Pension sector over the last number of years but regulators, consumer interest groups and advertising standards have ignored it. It's mainly in the term assurance market but is now standard practice, on annuities, for the largest insurer in the Country.

I have maintained that this practice inhibits competition and stifles innovation. It's the lazy mans way of pricing your product and not giving a toss about competing for business on product features.

If you're accepting business at a price lower than your book rate then you're effectively 'buying business'. I mean, why have 'rates' at all if you're just going to do it for the same price as your cheapest competitor?

Recently, Friends First held their hand up and admitted the following:

"We aim to do all we can to meet customers’ needs through offering high quality products at affordable premiums, ensuring transparent communication of charges and fees and providing unambiguous marketing literature. As a consequence, we have removed ‘price matching’ from our protection policies to improve customer transparency while improving the cost of our premiums at the same time.  You will now notice price cuts are across level and decreasing term products."


They've caught the bull by the horns and effectively blown the 'competition' out of the water by "doing all [they] can to meet customers’ needs through offering high quality products at affordable premiums, ensuring transparent communication of charges and fees, providing unambiguous marketing literature and rewarding them for long-term loyalty."


Answer that Caledonian Life, Aviva Life & Pension, Irish Life and New Ireland Assurance. NB : Zurich Life don't 'price pledge' and well done to them for not sinking that low.

In Praise of Hill Walking

(One of these days I’ll get back to blogging about Pensions & Investments)

It probably started with a pointed comment from my daughter about being a “couch potato”. And possibly living in an area surrounded by three ranges of mountains. I had the boots. Bought a few years prior with the intention of ‘doing something’ with them, but never had.   

15 Months Later

I haven’t stopped walking since. I’m no sooner finished one walk than I’m planning the next. I’m fit; fitter than I’ve ever been. Why? What’s it all about?

The bug just bit me. The early walks were low level and I just kept cranking them up, to improve. I joined a club (I’m now in three) to get familiar with the open mountain by being led by more experienced walkers. Plus, if you’re hill walking by yourself you can’t really gauge if you’re any good at it, other than put yourself on the clock. I’m competitive, so that’s not much good.  

You hear stories on the hills about so-and-so being a strong walker and about long distance walks with certain height-gains. If you wanted to improve as a walker you had to set your sights on these ‘Challenges’, the hill walkers personal achievement championships. So, I did a few of them and did okay. I even made up a few of my own.

Along the way, I’ve met some of the most wonderful people. People that don’t suffer from adhesive mattress syndrome, have no issue with atrocious weather conditions, don’t mind getting stuck in when their help is needed and willing to impart acquired knowledge to help you along the way.

When you want to talk, you can talk. When you want to have some ‘me’ time, no one bothers you. It’s an unwritten rule, there are many. It’s different being out on the hills: for me it has a calming influence in a stress free environment. So many beautiful places on my doorstep that I’d never have seen but for the fortune of putting on a pair of boots. The place names, the local history, the wildlife and vegetation; all discovered and learnt about by accident.

It’s not all serene though. The craic, banter, slagging that goes on is mighty. There are those that would say that telling someone, who is struggling on a walk, that “We’re about halfway” when they ask “Is there far more to go?” might be mental torture, especially when 90% of the walk is done. But, it’s part of the ‘rise’ and you have to have a sense of humour at this game. Another favourite of a fellow walker is feigning snoring while directly behind someone that is struggling on the climbs. We laugh, and the misfortunate that’s at the receiving end does too; in time.

       

I struggled to find my pace for a long time. I suppose we do this in life’s pace also. Going off too fast and then feeling the pressure on the climbs. The food was important, the amount of water was important, the boots, the gear, the poles, what was in the rucksack (and what wasn’t); it all mattered in the quest for improvement. But it didn’t matter, in a way, because you’d get it right next time. There’s no All Ireland or Olympics to aim for. You walk and learn.    

I’ve learned how to read a map and use a compass. I have an app on my phone that can tell me where I am, if I go astray. If you’re fit enough you’ll stay calm. This gives me the confidence to walk alone on the three local ranges, because if the mood hits I have to go out.  

The walks have now progressed to be of a more strenuous nature. As another walker said at the weekend “We’re in training. But for what?” We don’t know, but we enjoy it so much there doesn’t have to be a target in sight.

This stuff just makes us happy!!

    

The Fei Sheehy Challenge

Fei is my daughter. She died last year. I marvelled at her spirit, courage, dignity, toughness and positivity of attitude in grappling with the cancer cards that she had been dealt. She is my hero.

Two months after her death, I decided to end a 30 year period of physical inactivity by taking to the local hills and mountains. I had been looking up at Galtymore and Slievenamon all my life and had never set foot on them.

The initial ‘getting to know you’ walks/hikes were tough but there was a certain therapeutic attraction in persevering and Fei wouldn’t have given up. As a spectator, she would be willing me on and rewarding me with high-fives and hugs. As a result of the work effort put in, I got kinda fit doing something that I’m now addicted to.

The  weekend of 28th, 29th & 30th June saw the birth of, what I am going to call, ‘The Fei Sheehy Challenge’. I had considered naming the challenge of ascending the four local peaks of Fauscoum, Slievenamon, Galtymore and Knockmealdown, in one day, in her memory but my walking buddies suggested something tougher, “a proper challenge”.

The challenge was to ‘Cross’ the length of the Comeragh, Knockmealdown and Galty Mountains over three consecutive days. It’s the cumulative equivalent of walking 93.5km, on rough terrain, while taking in the ascent of Carrauntoohil four times, from sea level, along the way.

So, at 15:56 on Sunday the 30th, I finished the final leg.

What I’d now like to do is organise this challenge as an event to raise money for (to be decided) charitable/volunteer organisations. I’ll be doing the three full walks over the three days again, next year.

I don’t expect that there would be a huge take up from other walkers on the full 3 day challenge, so what I’d propose to do is break it down to suit the ability of each hill walker. In this way they could join and exit the main walk at predetermined points on any/all of the three days.

Comments and suggestions welcome. I'll need a lot of help to put this in place.

If any sponsors would like to get involved, please let me know.

UPDATE - 14/01/2014

The event will be happening on the 1st, 2nd and 3rd of August. The website is here

DIY Challenge Walks

There are no shortage of Challenge Walks in the Country. There’s something for everyone in the walking calendar, depending on your level of fitness and ability.

As a relative newcomer to the hill walking game it’s hard to decide on which ones to do, especially when your mountain skills knowledge is pretty basic. You tend to rely on others to walk with or, in some cases, a good clear day.    

As I live in the ‘middle’ of the Galtee, Knockmealdown and Comeragh ranges I’m more familiar with these mountains, as club walks tend to focus on these three. I’m cool with that as there’s plenty of walking on all of them, you can make the route as easy or hard as you like.

What I’m trying to do is create challenge walks out of the ranges that are close to me, leaving aside the ones that are already on the Challenge calendar. You can then gauge whether the ‘hard’ ones are within your fitness/ability and how long they should take you.   

In a previous post I wrote about doing the 4 local peaks (Fauscoum, Slievenamon, Galtymore & Knockmealdown) in the one day. On the 27th of April it was the turn of the ‘Glencush Horseshoe’ (in reverse), with a twist.

The distance for this walk is 14 kms and the height gain is 1,100m. The route starts at Clydagh Bridge and takes in Knocknanuss, Slievecushnabinnia, Galtymore, Galtybeg and back to Clydagh over Cush. The challenge for me was to do the route twice.

It felt a bit odd walking those mountains twice in the one day but there was no rain, the wind wasn’t too bad and the mist had lifted the second time round so the views were better. How bad?

If any reader has DIY challenge route suggestion or has done any themselves in and around these three mountain ranges, please post below.

Pico del Inglés - Taganana, Vilaflor - Guarjara, and Teide

Another three days of excellent walking in Tenerife, last week. This time I had the pleasure of the company of two strong walkers from Peaks Mountaineering Club in Clonmel.

Tuesday

La Quebrada - Pico del Inglés - Taborno - Afur - Taganana (via Casa Forestal)

Distance - 21.5kms
Climbing  - 2,242m
Duration - 6 hours 49 minutes
Moving time - 5 hours 37 minutes.

We got a local bus from Santa Cruz towards Valle Seco and the turning point for the bus, at the end of the route, is where there is a sign for the walk start at La Quebrada.

A beautiful walk on well marked footpaths. It was overcast and a bit windy but there was plenty of cover from the vegetation. As a fellow walker described it "It's like walking in the Botanical Gardens for five and a half hours."

Aqueduct bridge near La Quebrada 

Afur

Taganana

Wednesday

Vilaflor - Degollada de Guarjara - Summit of Guarjara - Degollada de Ucanca - Valle de Ucanca - Vilaflor

Distance - 23.4kms
Climbing - 1,833m
Duration - 7 hours 55 minutes
Moving time - 6 hours 10 minutes.

The best day we had weather-wise. A good number of walks start/finish in Vilaflor at 1,465m and the paths and scenery are excellent. The summit of Guarjara stands at 2,715m and has breathtaking views of Teide National Park and surrounding peaks. The descent from Guarjara to Degollada de Ucanca was tricky enough but other than that a good safe hike.

En route to Guarjara

Arenas Negras

Teide, Montana Blanca, Pico Viejo (from Degollada de Guarjara)

Friday

Montaña Blanca car park - Pico del Teide - Los Charcos - Torre Blanco - Parador. [Used Senderos 7, 10, 12, 9, 23 (short scramble from Sendero 3 over Roques de García to pick up Sendero 23 again)]

Distance - 19.8kms
Climbing - 1,704m
Duration - 9 hours 14 minutes
Moving time - 6 hours 32 minutes.

By far the most difficult walk/climb I have encountered to date. Our average speed was a kilometre per hour slower than normal. The sole reason for this was the snow/ice when we got above 3,200m. Crampons would have helped.

The Teleferico Station was deserted and there was no need to show our permits and passports. I found the final 163m scramble to the summit difficult as I was virtually crawling. We met two other climbers on their descent and they were the last walkers we met until we got to the Sendero 23 side of Torre Blanco that evening.

It was equally as difficult on the descent. I'd say that this is a handy enough walk/climb without the snow and ice. We'll just have to do it again another time.

Even though it was difficult, it was the most enjoyable days walking to date. We all took a tumble and got bangs and bruises. We also learnt a painful lesson on snow blindness. You walk and learn.

Terrain near Refugio Altavista

Teide Summit

Pico Viejo Crater

(Rough) Sendero Guide

PS: If you want to do a long walk on Teide the bus service isn't great, the last bus leaves at 16:00. They don't accept the Bono Via card on this route. Also, there are no taxis based in Parador so one would have to bone up from Vilaflor to bring you back down south.

Fauscoum, Slievenamon, Galtymore & Knockmealdown

I've been hill walking now for just over six months and recently had a notion that I'd like to try and climb these four peaks in the one day ie touch the Trig stones or Cairns on each. I wasn't sure about how long it would take and only mentioned it to my daughter. Her response was "You're crazy!!".

I set off to do climb Fauscoum from Kilclooney Wood at 07:30 yesterday morning and was back at the car at 09:25. Headed over to Slievenamon and was walking at 10:00 and was back down at 11:15.

I was on the Black Road at 12:15, after having a bite to eat, and made it back down to the car from Galtymore at 14:35. Left the car at The Vee at 15:00 to head up Sugarloaf via the Grubb monument for Knockmealdown and was back down at 17:40.

I don't have a GPS so I'm not sure what distance or height gain was involved. Judging by the way I felt at the finish and a very rough guess from the map, I'd say it must have been about 2,200m ascent. The weather was great on the first three climbs but cold, windy and foggy on the Knockmealdowns.

Update 13th March 2013 - A club member informs me that the height gain on this challenge is 2,339m (approx)  and distance is 28.5km.

Conversion Option & Smoking

In a previous post I reported that : With  Aviva/Hibernian Life - If you were a smoker when you took the original policy out but qualify as a non-smoker now, full underwriting (new proposal) is required to change the policy, during or at the end of the policy term. 

I am currently dealing with a case where the person converting is now a non-smoker, for a good number of years, and wants to 'covert' the policy with Aviva.

I've questioned the logic of charging a non-smoker smoker-rates on conversion as it just doesn't make sense, to me, that a healthier person should be penalised i.e. Complete a full new proposal to avail of non-smoker rates or pay the rates of a smoker.

So, I asked for the original policy terms and conditions to establish that it was clear from outset.

This is the relevant page: (click to enlarge)

Frankly, I just don't see how they can make this interpretation. Is it one for the Ombudsman to adjudicate on? 

Curiously, Aviva's current policy conditions state:

The new policy conditions will be issued in accordance with Aviva standard premium rates and policy conditions applicable at the time and the premium will reflect the smoking habits of the Life or Lives Insured advised by the application for the new policy

Walks in West and North of Tenerife

I’ve been over and back to Tenerife for the last 10 years and I’ve never ventured far from the usual haunts. Last month I walked up through the ‘middle’ of the island and I went back last week to do some walking in the North and West of the island.    

It blew me away. The walks were well marked, the weather was great, the public transport was very good and the scenery was fantastic.

Tuesday

Garachico to San José de Los Llanos to Erjos - This was an early start for me as I had to get 3 buses to reach Garachico. You’re climbing for 3/4 hours and there was a bit of frost on the ground near La Montañeta. I missed a marker near Arenas Negras and was a bit lost for 10 minutes but I traced my way back to the previous marker. The book walk was to San José de Los Llanos but I decided to walk to extra 4kms to Erjos as the Icod/Adeje bus passes through it.

21kms
Start 08:08 Finish 13:26
1,400m Ascending
400m Descending

Garachico

Arenas Negras

                                                     
Wednesday

Santiago del Teide to Erjos (via Montana del Estrecho) to Masca - Got the same bus from Adeje to Santiago as previous day and the first part of the walk is in a horseshoe out near Chinyero. Much of the walk from Erjos towards Las Portelas is on a forest track but when it opens up, boy!! is it worth it. Final destination was Masca, which *is* as beautiful as they say.  

30kms
Start 08:37 Finish 14:35
975m Ascending
1,165m Descending 

Erjos

On Route to Masca

Thursday

Punta del Hidalgo (via El Batán) to Cruz del Carmen (via Chinamada) to Punta del Hidalgo - In the walk book I had, both of these walks started in Cruz del Carmen (highest point). Finding the start was tricky from the bus, and I was fortunate to see the marker. I found the 12km up via El Batán tough going in the heat but was glad I did both walks in a loop. It’s always worth it when you get to the ‘top’.
 
22Kms
Start 09:11 Finish 15:20
1,250m Ascending
1,250m Descending

El Batán

From Cruz del Carmen

Saturday

Iguesta de San Andrés to Chamorga to Faro de Anaga to Almáciga - This was the most eventful walk. I met lots of other walkers, probably because it was a Saturday and the natives were out in force. Also met three lads carrying bags of cement and other building/repair materials in relay along the coastal walk, not far from El Draguillo. I didn’t see any ‘warning’ sign at Faro de Anaga that the coastal path was officially closed but it seemed a tad overgrown and there was good bit of rock debris. Beautiful walk though.

25Kms
Start 09:15 Finish 15:15
1,165m Ascending
1,225m Descending   

Faro de Anaga

Roque de las Bodegas

NB : The times will depend on your own pace but I was walking at a very brisk pace.

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 ;-)

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.

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?

No.

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