Have Quinn Life applied the 2011 pension levy incorrectly at investors' cost.

[3CC]

Hi all,

To summarise, QL seem to have been selective in the method that they have used to apply the 2011 pension levy to the detriment of investors.

I recently queried Irish Life on the 2011 pension levy deducted by QL. I could not understand why ~0.7% of the units had been deducted instead of 0.6% that is required.

After a number of emails over and back, it seems that QL did not apply the deduction until Oct 2011. By that time, the value of the fund had dropped. So they calculated 0.6% of the value of the fund at June 2011 and in order to recover that amount, they had to sell more units than they would have had to sell had they applied the levy at June 2011. It seems to me that, QL's failure to apply the levy at the correct date has resulted in my losing extra units due to the fact that the fund had fallen in the meantime.

I am sure that this issue was not lost on the number crunchers in QL when they decided how to retroactively apply the levy. If fund values had risen over that period, I suspect the would have simply deducted 0.6% of the units in October 2011 which would have yielded more than the value of those units at June 2011 and QL would be free to keep the difference.

If QL acted correctly in this, there is nothing to stop pension companies waiting a few months after the June date each year before deciding how to apply the deduction. If the fund falls, deduct the value of the 0.6% at the June date resulting in the sale of additional units and pass the cost to the investor. If the fund rises, sell 0.6% of the units, and keep the difference. This would give QL to wage a bet each year with the entire value of the levy with certainty of a win or beak even outcome.

Have I explained this clearly? Has anyone else noticed how this has been handled by QL?

 

[LDFerguson]

All companies must calculate the levy as 0.6% of the fund value as at the end of June. They cannot choose to calculate the levy at another date that might be beneficial to them. QL are not alone in physically deducting the amount later in the year - there's a prescribed payment date also.

So you haven't lost anything and QL haven't gained anything. From what you're saying, the levy was correctly calculated based on your policy value of the end of June.

 

[ashambles]

So you haven't lost anything

Are you sure, Irish Life for instance calculate 0.6% in June and simultaneously sell the units (well maybe that's not what happens behind the scenes but that's how it appears in personal pension funds).

QL delaying in selling the shares for three months seems daft, markets have settled a bit recently however we're well used to large swings one way or the other. And it would seem to cost real money - say someone had 100,000 units in June they'd have ended up with 99,400 units the Irish life way. The quinn life way they ended up with 99,300 units.

 

[LDFerguson]

I don't know what QL do but they should just backdate the selling of units to the end of June. So although it might be August when the buttons are pressed, the units are deducted from the end of June total.

 

[3CC]

say someone had 100,000 units in June they'd have ended up with 99,400 units the Irish life way. The quinn life way they ended up with 99,300 units.

Just to confirm this precisely what has occurred. Due to falling markets, it was necessary to sell 0.7% of the units in October to recover 0.6% of the total fund value in June.

I am cynical enough to assume that if markets had risen between June and October, QL may have sold 0.6% of the units in October for more than the 0.6% of the total find value in June which would result in a surplus to QL.

I would be very interested to see how someone with a QL pension that rose in value between June 2011 and Oct 2011 was treated? Anyone in that boat?