Shake-up for Irish pensions market as two new international firms add competition

The pension market is on the brink of upheaval after two major international providers announced they would be launching the country’s first new retirement products in years.

The launches are likely to put pressure on existing players, particularly market leader Irish Life.

New entrants could lead to lower fees overall as the €7.5bn Irish bond market has long been criticized for high fees.

Vanguard and Royal London are the first providers to enter the Irish fixed income market in years.

Brokers are expected to begin offering two low-cost annuity offerings from Vanguard, the world’s second-largest wealth manager.

Financial advisor Liam Ferguson of Carlow-based said the Vanguard pensions would be invested in Vanguard’s index funds.

There are annual fees of just 0.45 percent, which is less than half the annual fee of a standard PRSA (Personal Retirement Savings Account).

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Mr Ferguson said it was an execution-only offer with no financial advice included in the fees.

He said there will be two options for retirement savers to take advantage of the Vanguard product.

There is a one-time setup fee of 1 piece and an annual fee of 0.45 pieces. The other option is no setup fees and a 0.65 percent annual fee.

Royal London, which has built a profile with mortgage protection policies here, plans to offer new pre- and post-retirement products in Ireland.

It initially offers Personal Retirement Bonds (PRBs) and Approved Retirement Funds (ARFs).

It is the first annuity provider with no policy fees and fund switching fees.

Royal London said its entry into the pensions market in Ireland is good news for pension savers as it will increase consumer choice, increase competition and drive product improvements across the market.

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The market here is dominated by Irish Life, which has recently acquired a number of brokerage firms, with large market shares also held by Bank of Ireland’s New Ireland, Zurich Life and Aviva Life and Pensions.

Mr Ferguson said: “After years of mergers and acquisitions in the Irish fixed income market, the choice of providers and funds for the Irish consumer has reduced significantly, which is never a good thing.”

He said Equitable Life, Quinn Life, Hibernian Life, Friends First, Scottish Provident and Canada Life have all gone or been acquired or merged by other pension companies. “That’s why we’re delighted to be able to offer Irish fixed income clients low cost index-tracking Vanguard funds with low upfront payments and ongoing fees,” he added.

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Vanguard has over $8 trillion under management with over 30 million investors worldwide.

Royal London Ireland chief executive Noel Freeley said his firm’s fixed income products would give money managers Royal London Asset Management and BlackRock access.

Mr Freeley said: “Competition in the Irish bond market has been broadly unchanged for some time.

“New entrants are rare, primarily due to the level of investment required to deliver a quality product and the expertise required to build a robust service support platform.”

Meanwhile, Labor Party Ged Nash’s proposed pension transparency bill has reached the second stage in the Dáil.

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