# Quinn Life investment funds: right to be worried?



## stanbowles (5 Apr 2010)

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)_


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## Calico (5 Apr 2010)

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.


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## Brendan Burgess (6 Apr 2010)

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  |              €2,800So 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.


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## Brendan Burgess (6 Apr 2010)

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.


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## Brendan Burgess (6 Apr 2010)

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.


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## mtk (6 Apr 2010)

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


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## Calico (6 Apr 2010)

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.


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## Brendan Burgess (6 Apr 2010)

Hi MTK

As this was not clear from the original post, I have updated it.

Brendan


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## kfpg (6 Apr 2010)

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?


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## djduffy (7 Apr 2010)

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.


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## goose (7 Apr 2010)

Has Anyone moved from QL?


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## mercman (7 Apr 2010)

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.


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## PMU (7 Apr 2010)

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.]


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## Complainer (7 Apr 2010)

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.]


How does this impact SSIA accounts, where the investment was made monthly over 5 years?


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## Brendan Burgess (7 Apr 2010)

Good point PMU. Is it a deemed disposal if prices have fallen? 

Brendan


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## PMU (7 Apr 2010)

Brendan said:


> Is it a deemed disposal if prices have fallen? Brendan


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.


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## finbar10 (7 Apr 2010)

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.
> 
> ...



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


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## Brendan Burgess (7 Apr 2010)

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.



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?


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## jpd (8 Apr 2010)

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!


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## JJ2000 (8 Apr 2010)

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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## goose (8 Apr 2010)

I think JJ2000 has a very good point. If a policy is currently worth 100,000 can you simply split the policy into 5 equal 20K policies? Surely it cant be this simple to get around the Max 20K limit guarantee?


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## aminvest (9 Apr 2010)

I just cashed in my Quinn-Life policy, valued at around 90k.  Was in profit by around 3k, so didnt lose out in any way really

In my opinion there is too much going on in the Quinn group to be sure  my money is 100% safe.

Problem is what to do with the money now - I think its probably safest  in Rabo for a few months until things settle down - any suggestions?


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## kfpg (9 Apr 2010)

Can anyone tell me how the tax is handled on encashment of quinn life policies?
Do Quinn deduct the 28% exit tax at source on your behalf or do you have to pay it?
Is there any other tax liability on the encashment of quinn life funds other than the stated exit tax?


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## LDFerguson (10 Apr 2010)

kfpg said:


> Can anyone tell me how the tax is handled on encashment of quinn life policies?
> Do Quinn deduct the 28% exit tax at source on your behalf or do you have to pay it?
> Is there any other tax liability on the encashment of quinn life funds other than the stated exit tax?


 
Quinn Life pay the Exit Tax on your behalf if you cash in and have a liability, i.e. if you're cashing in for more than what you invested.


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## Dave Vanian (10 Apr 2010)

For those primarily interested in the compensation scheme, Standard Life (and possibly Caledonian Life / Royal Liver but I'm not sure) operate as branches of their UK parents and as such, qualify for the UK Financial Services Compensation Scheme.

Potential compensation is 90% of the claim with no upper limit.


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## finbar10 (15 Apr 2010)

finbar10 said:


> 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



As far as I've been able to determine the investor compensation scheme does not apply to QL. Quinn Life is a life company rather than an investment company. Its funds are basically investment policies contained within a life assurance wrapping. The compensation scheme therefore would likely not apply. QL is a separate company. Its funds are backed by corresponding "ring-fenced" assets. But if the entire Quinn Group collapsed it's unclear to me how "ring-fenced" these assets would be.


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## thebos09 (19 Apr 2010)

is this true that Quinn don't come in under the investment protection scheme?


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## Happy Girl (31 May 2010)

[broken link removed]

Any further views on safety of our Freeway Funds with Quinn following the above article on Saturday last.


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