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Now you know what charges can be applied on the money you are putting into your pension the next step is looking at ongoing charges.

 

Just to be clear an ongoing charge is applied on an “ongoing” basis. This means you are not only charged when you put money in but you are also charged fees to cover the cost of managing your fund.

 

If your fund manager is working hard for you and your fund is performing well allowing these charges to be covered easily then it is a win-win for everyone. However if your fund is performing poorly and your charges are more than your funds growth resulting in a loss you should investigate further.

 

Lets take a look at what ongoing charges may be taken from your pension fund.

Annual Management Charge

This is a charge applied to your pension fund annually. It is usually a percentage such as 1%. Each calendar year 1% of your fund is taken as a charge.

 An Annual Management Charge may also be known as an Annual Fund Charge of AFC.

Policy Fee

Some Retirement Annuity Contracts may have a policy fee. This fee is normally taken monthly.

It is easy to see how these charges can add up to tens of thousands of euros over the lifetime of your pension. A saving of just 0.25% in your AMC can make a huge difference to the final balance of your pension fund.

 

During your Free Pension Health Check your financial advisor will compare the charges you are paying with the other charges in the market. If lower charges are available in another fund you are considering then your advisor will be able to show you the effect these lower charges will have on your pension balance over time. 

 

This is called a reduction in yield calculation or in other words it shows you how much the charges applied to your pension reduce your pension pot. 

 

During a Free Pension Health Check your Qualified Financial Advisor will provide you with a Reduction in Yield Graph when discussing your options with you.  

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