PENSION FUND charges are eating away as much as one euro in every six

PENSION FUND charges are eating away as much as one euro in every six (17.4 per cent) of retirement savings in occupational schemes, according to a report on charges published last night.

The figure is dramatically higher for those with individual pension arrangements – such as personal retirement savings accounts (PRSAs) and executive pensions – where the average “loss” is between 21 and 31 per cent.

The figures are on top of the 0.6 per cent annual levy imposed on all private sector pension funds by the Government and will add to concerns of pension fund members ahead of a budget in which Minister for Finance Michael Noonan has already signalled tax reliefs for pension contributions are under review.

The Report on Pension Charges in Ireland 2012 was compiled by the Department of Social Protection, with assistance from the Pensions Board, the Central Bank and PricewaterhouseCoopers. It studied the impact of disclosed and hidden charges on retirement savings.

Bitesize Global Overview… Oct 22nd 2012

Equity markets gain – Equity markets rebounded from the previous week’s losses after upbeat economic data, good earnings results and a statement from Moody’s regarding Spain’s credit rating.

US economic data – US housing starts well exceeded economists’ forecasts, after jumping to an annual rate of 872,000 in September. With building permits also increasing, these gains may be sustainable. Elsewhere, retail sales rose strongly, while industrial output also rose, both of which topped forecasts.

European regulation – EU leaders agreed on a timetable to introduce common regulation of the euro area’s 6,000 lenders by January. The 27 member states decided to put the framework for a single regulator in place by the end of this year.

Currencies – On currency markets, stronger-than-expected economic data boosted the demand for higher-yielding currencies over the week. The €/$ rate strengthened slightly to end the week at €1.30.

Oil – Despite the forecast-beating economic reports released during the week, the West Texas oil price fell overall, partly attributed to some disappointing quarterly earnings and sales forecasts, raising concern that slowing economic growth will reduce oil demand. The price fell 2%, to $90 a barrel, over the week.

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Financial News Bites…. Oct 17th 2012

THE Spanish government said today it will decide within the next few weeks whether to ask for outside financial help.

It noted that it might opt for a precautionary line of credit instead of bailout cash.


BANKS have hit back at claims by the Central Bank’s director of banking supervision that they have adopted a “wait and see” approach to arrears.

Fiona Muldoon yesterday accused the banks of paying “lip service” to the idea of making progress in dealing with mortgage arrears.

The Irish Banking Federation said today that banks are addressing the problem in accordance with the timeline set down by the Central Bank itself.


THE German government has cut its official 2013 economic growth forecast from its previous prediction of 1.6% to 1%.

But the Economy Ministry increased this year’s forecast for the country’s economy – Europe’s largest – from the 0.7% it predicted in April to 0.8%.


Financial Advisers Can Really Add Value (Irish Indo)

It’s the job of a nice calm adviser to save the average market plunger from themselves..

IT has always been a tenet of faith in markets that individual investors are the financial equivalent of shark meat, forever bamboozled by news flow and buying high and selling low. The majority of these investors do not have financial advisers.

The classic view is that small investors are far too prone to being overwhelmed by news flow, selling out after plunges and buying after stocks or markets surge. This is known as the “behaviour gap,” that margin between a market-neutral outcome and what we actually achieve in our fumbling.

Fixed income investors fare even worse, perhaps because the bond market is a port of refuge during periods of market volatility. Over 20 years the average investor has made just 0.94pc annually, underperforming the Barclay’s Aggregate index by 5.56 percentage points.

Interestingly, the average equity fund investor, for all his or her supposed foibles, actually managed to outperform systematic investors over the past 20 years, according to the study.

Advisers can really add value by changing behaviours among their clients, by educating them to the risks and rewards so that their clients make better provision for the future.

It may be that cooling down the enthusiasm of investors when they are hell-bent on buying or selling isn’t really that much of a value generator. That doesn’t, however, mean that there aren’t client patterns of behaviour which could profitably be changed.

Undersaving, based on an overly optimistic view of either future earnings or future investment returns, is one area, but advisers who are brutally honest about this have always risked losing their clients to other firms selling pipe dreams.

(Article courtesy of Irish Indo – James Saft)

New Star FM View – Honesty with our clients & educating clients as much as possible is at the heart of all we do….

AIB and EBS launch product for those in negative equity seeking to trade up.

AIB and subsidiary EBS have launched a negative equity trade-up mortgage that will allow customers in negative equity to trade up to a larger property and take their debt with them.

The companies said the product was being rolled out in response to customer demand. Increasingly, people find the properties they bought in the boom no longer meet their needs.

Customers who want to avail of this product from either EBS or AIB will have to demonstrate they can an afford the new, larger mortgage and that they are not experiencing financial difficulty.

Trevor Grant of Mortgage Negotiators said any attempt to help those in negative equity is to be welcomed, but that this product would help very few mortgage holders.

“Very few customers will be able to demonstrate sufficient net disposable income to qualify for the mortgage,” he said. ” This is exemplified by the take up of Bank of Ireland’s similar product — which as we understand it has merely been a handful — launched earlier in the year.

“Like many of the new launched ’innovative products’, it looks good on paper, is unworkable in practice, therefore no real impact.”

Don’t leave it too late to make the most of your Tax Relief!

Is this your last chance to qualify for 41% Tax Relief on your Pension….?

The programme for recovery includes a proposal to reduce marginal relief from 41% to 20% – and recent commentary continues to support…

John Moran – Secretary General, Department of Finance – Conference 25th September 2012

“Secretary general of the Department of Finance John Moran told the conference the State had signed up to delivering a further €900m in savings from pensions in the period up to 2012, “including a move to standard rate tax relief on pension contributions over that time”

We’ll have to watch this space & see what happens… Don’t leave it too late to make the most of your Tax Relief!