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Consumer Question:
I am lucky to have substantial pension savings, now in ARF (approved retirement fund) funds with various insurers. I understand funds can fall as well as rise, but my query relates to the security of these monies.
My advisers reassure me I have nothing to worry about but the recent solvency issues relating to American and Swiss banks is a worry.
I see from insurers’ literature that all of them seem to have many billions of euro in investment funds. Who is tasked with keeping an eye on them?
Answer from Jason Walsh, Fund Proposition Lead at Royal London Ireland
Before anyone invests their money in a fund, they need to be comfortable with both the asset classes they plan to invest in and the level of risk they are willing to take. Each fund a person invests in has literature available to give an indication of what their money will be invested in, from its prescribed investment objective to the level of risk within the fund. The current industry standard in Ireland is a one to seven scale with one being the lowest and seven being the highest risk level.
In your case you are invested through an insured policy, which means you’re most likely to be invested in a unit-linked fund. Investing in a unit-linked fund issued by an insurance company allows you to combine your money with other unit-linked policyholders and gives you an opportunity to invest your money in a much wider spread of investments than investing on your own, in a tax efficient manner.
In Ireland, Life Companies are regulated by the Central Bank of Ireland and will often have a rating from an external body, such as Standard & Poors or Moodys, which can provide a useful benchmark as to their underlying financial strength.
Each Life Company usually has a dedicated investment governance team whose focus will be that each of these unit-linked funds observe both the investment objectives set for them and the industry regulations. The Board of the Life Companies can also use an Investment Governance Committee to monitor these investments and again ensure they are aligned with both the objectives and the regulations.
Your Financial Broker can give you more detail specific to the insurers with whom you have invested your pension savings.
ENDS
This question was submitted to and first published by The Irish Independent
About Royal London Ireland
Royal London Ireland has a history of protecting its policyholders and their families in Ireland, and recently launched a new Pensions business in Ireland. Our business heritage in Ireland is nearly 200 years. The Caledonian Insurance Company's first office outside Edinburgh opened on Dame Street, Dublin 2 in 1824.
Today, Royal London Ireland is owned by The Royal London Mutual Insurance Society Limited – the largest mutual life insurance, pensions, and investment company in the UK, and in the top 25 mutuals globally, with assets under management of €178 billion, 8.6 million policies in force, and 4,100 employees. Figures quoted are as at 30 June 2023.
Royal London Ireland’s office is based at 47-49 St Stephen’s Green, Dublin 2.