A Guide To Pension Fees & Charges

20 Mar, 2024
A Guide To Pension Fees & Charges

At askpaul we feel it is essential to educate our clients about the fees and charges that come with their pension plan. Often, these charges can be disguised and confusing, making it challenging for individuals to understand what they are paying for. 


To make things easier, let’s break down the different types of charges associated with a pension plan. 


Allocation Charge: This is the amount charged on the way into your pension plan. For example, a 98% allocation charge means that you will be charged 2% on the way in, resulting in only 98% of your money being invested in your pension plan. At askpaul, we strive to provide 100% allocation, meaning there are no charges on the way in. However, this depends on the type of contract and fund you are looking at, as well as your age and other factors. Nonetheless, the majority of our clients receive 100% allocation. 


Annual Management Charge/ Fund Management Charge (AMC or FMC): These charges usually range from 0.5% to 2% and depend on the type of contract and fund you choose. While some individuals may opt for lower charges, higher charges can also mean specialist funds with excellent long-term returns. At askpaul, we try to find a balance between charges and good returns for our clients. 


Exit Penalties: These charges typically apply to lump sum contracts for the first five years. If you move from one fund to another, you may incur an exit penalty, which decreases over the five-year period. Not all contracts have exit penalties, and it depends on your advisor’s payment structure and the contract’s term. 


Policy Fee: Some companies charge a policy fee, which can range from €4 to €7 a month. For those paying €100 to €200 a month, this fee can add up, as it is on top of the allocation and management charges. At askpaul, we ensure that our clients understand all the charges and find the best charging structure that suits them. 


If you have an existing pension plan, we recommend booking a review with us, as charges have changed over the last 5-10 years. It is crucial to make sure that you are up-to-date with the best charging structure, as you do not want to be paying too much money to your pension provider. We are confident that we can help you beat your current charging structure and provide a better plan for your retirement. 


In summary, understanding pension fees and charges is crucial to making informed decisions and ensuring that you are getting the best value for your money. At askpaul, we aim to make things clear and simple for our clients and provide tailored solutions to meet their needs. Book a review with us today to find out how we can help you plan for a secure and comfortable retirement. 


Ready to get started?

Find out more about our Services

Have a Financial Question?


Have a question? You can always askpaul!

Connect on social: