Duty of pension providers?

Hi,

I've a query regarding my Mother's pension. After all of us kids had grown up and moved out, my Mother went back to work and took out a pension. The pension period was 2006 - 2014, when she would retire at 65. The pension opened was a PRSA, investing in an Irish Life fund. Naturally enough, the fund performance has been very poor, and her contributions are now only worth two-thirds of what was put in (fund down c.33%).

What I'm wondering is, is there any obligation on the way pension providers invest the contributions? Should they have noted that the total period of the pension is less than 10 years, and therefore there wouldn't be enough time to recoup any losses in equities, and a fund that is predominantly invested in equities would be inappropriate for her?

Or, is the case that they acted correctly and the it was just bad timing regarding the market - I know we have an obligation to keep an eye on our pensions as well!

Thanks for your help.

Did your mother go to a financial advisor in 2006? If so, then they should have done a fact find with your mother to assess her level of risk.

Irish Life would only invest your Mothers contributions based on the fund choice she would have selected on the application form

The Irish Life Default Investment Strategy (DIS) for PRSAs aims to tackle the issue you refer to - investing in higher-risk assets initially and gradulayy switching to lower-risk assets as the client approaches retirement age.

However, this strategy is one of a number of choices which would have been open to your mother at the time she started her PRSA.

Did she deal directly with an Irish Life salesperson, a broker or a tied agent? The salesperson would had an obligation to ensure that she understood her options and advised her on the fund choice most suitable for her particular needs. She should have been given a "reasons why" letter detailing why the particular fund was recommended.

If you feel that she didn't receive information at the point of sale regarding the potential pitfalls of an equity-linked fund, she may have grounds for complaint. But she'd need to dig out the point of sale documentation to prove it.

Not saying that this is the case here, but if it was explained to her that funds can go down as well as up, and she agreed to proceed, she has no grounds for complaint simply because the fund went down.