Quinn Life investment funds: right to be worried?

S

stanbowles

Registered User
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Following the appt of administrators to parts of Sean Quinn's empire, and the disclosure that his family firms owe 4 billion (!) euro to bondholders, of which 3 billion odd was blown on AngloIrish, how worried should I be about my (comparatively modest, but then again compared to 4,000,000,000 euros most investments are...) QL investment fund? Does an index linked fund like this enjoy same level of state protection as bank deposit?

(off topic Shooting the Breeze question deleted - Moderator)
 
As was mentioned in another thread, investments held in investment houses that go under are protected under the Investment Compensation Scheme up to 90% of the value of the investment subject to a 20k maximum.

That doesn't help much in the cases of larger sums of money so if that includes you then perhaps there is reason to be worried. I am in a similar situation and am considering my options. The problem is that if your investments are in negative territory (and most are given the performance of the markets over the last couple of years) then by withdrawing them now and re-investing some place else you are increasing your tax liability to taxes on gains (28% i think). In other words you can't 'transfer' your loss into a new investment and will be immediately taxed on gains.

That said, QL and various other independent sources have said that the investment side of Quinn's business is not exposed at all to the mess with the Anglo loans and the insurance business. I'm sure this also would have been considered by the Regulator when the decision to appoint administrators was made.

All in all, I think investments with QL are probably okay, but it may be worth thinking of reducing them to round about the 20k mark to be on the safe side.
 
Calico's point here is very important and I want to make sure that everyone understands it. It's so important, that I would suggest that you should not transfer from a Quinn unit-linked fund if it's worth less than you invested.

Stay with Quinn

Amount invested | €30,000
Value now| €20,000

Sell in 2012 | €30,000
Capital Gain | 0
Exit tax | 0
-

Switch to similar fund with similar charges and performance

Amount invested | €30,000
Sell now| €20,000

Reinvest |€20,000

Sell in 2012 | €30,000
Capital Gain | €10,000
Exit tax | €2,800
So it will cost you €2,800 to switch. While I think that there is some small risk, I don't think it's enough to switch.

 
If your investment in Quinn is worth more than you invested, and if it continues to rise, then you won't lose out by switching.

Stay with Quinn

Amount invested | €20,000
Value now| €30,000

Sell in 2012 | €35,000

Capital Gain in 2012|€15,000
Exit Tax|€4,200
Net Value of fund|€30,800
-

Switch to similar fund with similar charges and performance

Amount invested | €20,000
Sell now| €30,000
Exit tax|€2,800
Reinvest |€27,200
Sell in 2012 | €31,733
Capital Gain in 2012|€4,533
Exit tax in 2012|€1,269
Net value of fund|€30,464

So it costs €336 to switch.

Depending on where you invest, you may pay the 1% levy as well on the reinvested proceeds.

Gerard Sheehy was quoted in Sunday's Times as saying that www.investandsave.ie will do the same fund through Zurich at the same costs as Quinn and won't charge you the 1% levy.
 
If your investment in Quinn is now worth more than you invested, and you switch now, but prices fall, you will lose out.

Stay with Quinn

Amount invested | €20,000
Value now| €30,000

Sell in 2012 | €20,000

Capital Gain in 2012|0
-

Switch to similar fund with similar charges and performance

Amount invested | €20,000
Sell now| €30,000
Capital Gain now | €10,000
CGT now|€2,800

If you reinvest the €30,000 now and it falls to €20,000 before you cash it, this loss will be of no use to you. You will have paid €2,800 more tax than you would have paid by staying with Quinn Life.
 
i agree this is a key point but remember it may not be in negative returns e..g
i went into the Quinn latin american freeway fund at 1.3 which which went down to 0.67 at lowest point and is now back at 1.5+ so you may not be in negative territory
 
Another thing worth mentioning is that if you switch to a new fund you will more than likely get hit with entry fees. So in Brendan's example above, if the entry fee is 1%, that is another €200 gone.
 
All of this is interesting and helps people to make up their mind about what to do with funds. However clearly the biggest factor people need assurance on is the safety of their funds with Quinn Life. There have been various different statements, one of which is signed by Siobhan Gannon the MD of Quinn Life stating that the type of unit funds being discussed here are perfectly safe, are secured by reserves and perhaps critically important is that these reserves are ring fenced for depositors / investors in that funds cannot be transferred to and from other Quinn group companies.

Are my assertions correct? Can we believe them?

Personally if a Quinn 'meltdown' event were to take place I find it hard to believe they would just be able to simply reimburse everyone to the tune of 100% of the fund values they hold!

What do others think?
 
Has anyone switched yet? I have a significant fund with Quinn and am in positive returns, I am concerned the Max secured is 20K. I checked out investandave.ie mentioned by Brendan, please note this site is actually run by Gerard Sheehy, it footer is below, his comments in the Irish times while all above board have a vested interest.
"©2007 - Gerard Sheehy - Gerard Sheehy is regulated by the Financial Regulator"

I would be interested in moving to investandsave.ie as long as the fund is the same as Quinns.

D.
 
Before investors decide to take drastic action, remember that there are other Financial Providers that are not fully squeaky clean. There are enough threads on AAM which should give others an insight as to where to go and what to do with their money.

AAM should set up a Key Post allowing subscribers post the past occurences and misgivings of Financial Providers operating in Ireland. Not meant to be a heap of rants but simply an example of what actually happens in the Irish Investment market.

I would say that Quinns IFs fair out pretty well, all things been stated.
 
One issue that may (or may not) influence you in deciding to stay or switch is the deemed disposal event under the Finance Act 2006 that occurs every 8th anniversary since the inception of an investment policy. Under this the exit tax is payable on the gains of the policy even where the policy is not encashed. So in 2010, if (a) you took out a QL policy in 2003; and (b) the policy has gains, you will pay the exit tax whether you exit or remain. If you are in this situation, as you have to pay the tax anyway, you it may (or may not) influence your decision to stay with QL. [Disclaimer: The above is comment / observation and is not a recommendation to follow any particular investment strategy or to buy / not buy any particular fund or stock.]
 
PMU said:
One issue that may (or may not) influence you in deciding to stay or switch is the deemed disposal event under the Finance Act 2006 that occurs every 8th anniversary since the inception of an investment policy. Under this the exit tax is payable on the gains of the policy even where the policy is not enchased. So in 2010, if (a) you took out a QL policy in 2003; and (b) the policy has gains, you will pay the exit tax whether you exit or remain. If you are in this situation, as you have to pay the tax anyway, you it may (or may not) influence your decision to stay with QL. [Disclaimer: The above is comment / observation and is not a recommendation to follow any particular investment strategy or to buy / not buy any particular fund or stock.]
Click to expand...
How does this impact SSIA accounts, where the investment was made monthly over 5 years?
 
Brendan said:
Is it a deemed disposal if prices have fallen? Brendan
Click to expand...
I think the idea that you pay tax on a gain and not on a loss. I'm not an expert on the Finance Act, so you would need to check out both the 2006 Finance Act and also the Finance Act 2008 that amended the 2006 Act on how the gains are calculated.
 
Calico said:
As was mentioned in another thread, investments held in investment houses that go under are protected under the Investment Compensation Scheme up to 90% of the value of the investment subject to a 20k maximum.

That doesn't help much in the cases of larger sums of money so if that includes you then perhaps there is reason to be worried. I am in a similar situation and am considering my options. The problem is that if your investments are in negative territory (and most are given the performance of the markets over the last couple of years) then by withdrawing them now and re-investing some place else you are increasing your tax liability to taxes on gains (28% i think). In other words you can't 'transfer' your loss into a new investment and will be immediately taxed on gains.

That said, QL and various other independent sources have said that the investment side of Quinn's business is not exposed at all to the mess with the Anglo loans and the insurance business. I'm sure this also would have been considered by the Regulator when the decision to appoint administrators was made.

All in all, I think investments with QL are probably okay, but it may be worth thinking of reducing them to round about the 20k mark to be on the safe side.
Click to expand...

Hi. I've a relatively modest amount (<10k) in a Quinn Life Freeway fund. I've thought about cashing this out just in case. But if 90% of this would be covered by the investor compensation fund I think I'd probably just leave it in there.

Can anyone confirm for certain that the Quinn Life unit funds are actually covered under the investment compensation scheme? Another poster elsewhere on the web was actually saying these funds are not covered by this scheme. Can anyone clarify what the exact situation is in this regard?

Finbar
 
PMU said:
I think the idea that you pay tax on a gain and not on a loss. I'm not an expert on the Finance Act, so you would need to check out both the 2006 Finance Act and also the Finance Act 2008 that amended the 2006 Act on how the gains are calculated.
Click to expand...

Hi PMU

But you pay tax on a gain from the purchase to the sales price. So if I deal as follows

buy|year 1|10,000
deemed disposal|year 9|8,000
Real disposal |Year 13|10,000

There is no tax on the loss between year 1and year 9
But is there a taxable gain between year 9and year 13?
 
As I understand the tax, There would be no tax to be paid in year 9 on the deemed disposal (nor any notional refund to offset against other tax)

On the real disposal, there would be no tax due either as there was no gain/loss overall.

The calculation mechanism used takes care of this - it's rather complicated and I don't have an example to hand. In broad terms, the tax due on a real disposal is calculated by ignoring the deemed disposal and then offsetting the tax due by the tax paid, if any, on the deemed disposal. You will even get a refund if the tax paid on the deemed disposal is more than the tax due on the real disposal. As for part disposals.... Hard to see how they could have made it more complicated than that!
 
Does it make any difference to the level of protection if you are invested in a QL fund through a pension - i.e. if I have a company pension [proprietary director] with Quinn Life, and in this pension it's invested 100% in the cash freeway, and I have 70k or so in this fund - what is the level of protection here, is it still only the 90% of the first 20k?

If you are married, does this up the level [i.e. how do register the pension as a "joint pension" or get your spouse's name on it, if that is what works to get your protection up to 40k]?

For that matter, I seem to recall [perhaps I am mistaken] that in Ireland there is no 100% protection of your pension funds [this was contrasted to the UK if I remember correctly, where funds were protected, Standard Life was given as an example, although I can't track down this article]

So if you jump from Quinn, where do you jump to - especially if preservation of your fund is a priority? or do you have to go the route of splitting it up into 20k piles??

Also, given the level of bailout given to Anglo, Irish Nationwide, EBS, and all and sundry, is it not likely that Quinn Life would also get rolled into all the 000,000,000's that are being added onto the national debt?!
 
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