Pensions - what happens if banks fail?

E

eimearnid

Guest
what about pensions taken out with the banks, in the event of a default and banks (BOI/AIB) failing? Would the pension be worthless as the investments are not guaranteed in any shape or form? Or are the banks in this case just the agent for the pension and the investment continues?
Or maybe a bigger question is - what happens to pensions if we left Euro?
 
Banks only act as agents for pension companies. Bank of Ireland sell New Ireland policies (branded as Bank of Ireland Life). AIB sell Aviva policies. A failure of one of the banks would only affect a pension policy to the extent that the particular pension fund invested in bank shares. At this point, most pension funds have already reduced their exposure to Irish shares in general by a significant amount compared to the over-exposure of a few years ago.

Irish Life Consensus fund is down to about 5.5% of the fund in Irish shares of any industry. The Consensus Fund tends to be representative of Irish Managed Funds in general.
 
This is a very good point and means that the average
manager "only" has an overweight position in Irish stocks of about 78 times given the weighting of irish equities in the msci world index of currently 0.07% of the world Market capitalisation.

To put this into perspective a us investor would need to invest about 3740% of their portfolio in us stocks to have the same degree of overweighting.
 
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