What would happen if your PRSA provider went insolvent

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Loki1974

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Hi Folks,

I have the majority of my pension with Zurich Life. I was considering moving an old occupational pension with a previous employer/ assurance company to Zurich, who I currently have a PRSA with. What state Guarantees are available if Zurich were to go insolvent due to an unexpected catastrophic event. I am just concerned about having all my eggs in the one basket. Thanks in advance
 
First of all, the investment funds do not belong to the life assurance company that runs them but are held separately.

If a huge assurance company like Zurich goes insolvent, this would affect the shareholders in the main. There would probably be some disruption to the day to day running of the funds but that would get sorted
 
Agree with @jpd here. Let's say you're invested in a Zurich Life US equity fund which holds 100 different US stocks. The fund itself is run as a distinct legal entity and must hold the 100 stocks. In the event that Zurich Life went bust, the fund (and all its assets) would transfer to another manager.

When Quinn Life went bust, Irish Life took over the running of their funds and nobody lost their money.
 
Thanks guys, and what would your views be if the fund went bust, would Zurich cover your loss or is it in the small print that they are not responsible. Thanks for your advices sofar
 
How would the fund go bust - all its investments would have to go to zero?

If that happened, it would be the least of your troubles as the only scenario that I can imagine is a catastrophic event such as all out nuclear war, a huge asteroid strike or an invasion by extra-terrestrials

Zurich have no obligation to guarantee the funds, so no they would not make good any losses

If you are that worried, keep your savings in a stongbox under your bed
 
Loads of companies have gone bust due to poor governance or fraud, look at Lehmen Brothers, Worldcom and Enron. I would hope that Zurich has cover in place in the event of something like this happening or if there is no cover, will the Government of the country , where the fund is based guarantee any losses.
 
Loki1974 said:
Thanks guys, and what would your views be if the fund went bust, would Zurich cover your loss or is it in the small print that they are not responsible. Thanks for your advices sofar
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Can you explain what you mean by "the fund went bust"?
 
Loki1974 said:
Loads of companies have gone bust due to poor governance or fraud, look at Lehmen Brothers, Worldcom and Enron. I would hope that Zurich has cover in place in the event of something like this happening or if there is no cover, will the Government of the country , where the fund is based guarantee any losses.
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It's an investment fund, nobody is guaranteeing that there will be no losses.

For Zurich funds, the fund buys securities, equities, bonds, properties or whatever. The value of those securities is the value that is payable to investors in the fund. If Zurich goes bust, those securities are still there to pay any claims to investors.
 
jpd said:
First of all, the investment funds do not belong to the life assurance company that runs them but are held separately.

If a huge assurance company like Zurich goes insolvent, this would affect the shareholders in the main. There would probably be some disruption to the day to day running of the funds but that would get sorted
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In a Life Assurance company unit linked funds are held in the name of the company. The investor is the beneficial owner of the funds which are nominally kept separate from the company's shareholder assets. I agree that in the event of insolvency by the company it would lead only to some disruption to customers accounts while the insolvency is resolved. The Central Bank, which regulates the industry, requires Life Assurance companies to report quarterly on its solvency position.
 
Loki1974 said:
Loads of companies have gone bust due to poor governance or fraud, look at Lehmen Brothers, Worldcom and Enron. I would hope that Zurich has cover in place in the event of something like this happening or if there is no cover, will the Government of the country , where the fund is based guarantee any losses.
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By cover, do you mean insurance? If so, the answer is no.

The whole point of owning shares is to accept some risk, in return for higher reward.

That is the whole point.

If you can't accept that, put your savings on deposit, which are insured up to 100k.
 
jpd said:
First of all, the investment funds do not belong to the life assurance company that runs them but are held separately.

If a huge assurance company like Zurich goes insolvent, this would affect the shareholders in the main. There would probably be some disruption to the day to day running of the funds but that would get sorted
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I know I should be able to give a definitive answer, given my background, but I think you're wrong on this @jpd It's the insurance company that invests in the funds. The individual has a policy with Zurich.
That said, I don't think the OP has any reason to worry. Zurich is required by regulation to hold an additional margin over and above the value of all its liabilities, including the the amounts invested in the funds for policyholders. If anything goes wrong, that margin is available to cover liabilities to policyholders.
 
Protocol said:
By cover, do you mean insurance? If so, the answer is no.

The whole point of owning shares is to accept some risk, in return for higher reward.

That is the whole point.

If you can't accept that, put your savings on deposit, which are insured up to 100k.
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I am not concerned about the value of the investment dropping. That is my own risk, which I am prepared to accept. My query is, if something catastrophic happened to Zurich , would my losses be guaranteed. The funds I am currently in are the Dynamic Pension& Invest and Performance Pension and invest, both of which are managed by Zurich.
 
Colm Fagan said:
I know I should be able to give a definitive answer, given my background, but I think you're wrong on this @jpd It's the insurance company that invests in the funds. The individual has a policy with Zurich.
That said, I don't think the OP has any reason to worry. Zurich is required by regulation to hold an additional margin over and above the value of all its liabilities, including the the amounts invested in the funds for policyholders. If anything goes wrong, that margin is available to cover liabilities to policyholders.
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Thanks Colm, that gives me some comfort. Essentially I am wondering if it would be wiser to spread your pension between different providers or would you be happy to leave your pension with one company. And if it is with the one company and a catastrophic event occurred within Zurich, how much of your pension would be either state guaranteed or underwritten by an Insurer.
 
Loki1974 said:
I am not concerned about the value of the investment dropping. That is my own risk, which I am prepared to accept. My query is, if something catastrophic happened to Zurich , would my losses be guaranteed. The funds I am currently in are the Dynamic Pension& Invest and Performance Pension and invest, both of which are managed by Zurich.
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What losses?
 
Loki1974 said:
I am not concerned about the value of the investment dropping. That is my own risk, which I am prepared to accept. My query is, if something catastrophic happened to Zurich , would my losses be guaranteed. The funds I am currently in are the Dynamic Pension& Invest and Performance Pension and invest, both of which are managed by Zurich.
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Those funds hold 620 different assets - mostly shares, along with bonds and some cash. For these funds to be rendered worthless, all 620 of their assets would have to become worthless.

Not only do Zurich Life have to maintain assets to match the value of policyholders' funds, but also an additional margin for safety over and above. They're not like a bank which can lend out client funds.

I would say the likelihood of total loss is very small.
 
LDFerguson said:
Those funds hold 620 different assets - mostly shares, along with bonds and some cash. For these funds to be rendered worthless, all 620 of their assets would have to become worthless.

Not only do Zurich Life have to maintain assets to match the value of policyholders' funds, but also an additional margin for safety over and above. They're not like a bank which can lend out client funds.

I would say the likelihood of total loss is very small.
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Thank you and really appreciate your trusted opinion
 
I think that the very large companies are very well capitalised and have a regime in place to stop something stupid happening.

But I was a big recommender of Quinn Life not realising that he was punting with money from the company. That could have impacted the solvency of Quinn Life.

Brendan
 
Brendan Burgess said:
I think that the very large companies are very well capitalised and have a regime in place to stop something stupid happening.

But I was a big recommender of Quinn Life not realising that he was punting with money from the company. That could have impacted the solvency of Quinn Life.

Brendan
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Thanks Brendan , fortunately Sean Quinn was quite unique , I agree that it would be extremely unlikely for the likes of Zurich to stray off course . It’s difficult not to think about the what ifs , especially when it’s the majority of my retirement income I am placing with the one company .
 
Anything is possible. There are past examples of this. A couple of people inside the company could take fraudulent/illegal actions. We would not know until after the fact. There should be checks and balances, and systems to make it impossible. But insiders can probably workaround them too. I think like others it would be extremely unlikley. But that said, I feel slightly more comfortable having pension in two providers!
 
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