What happens to your pension or investments if your insurance provider goes insolvent?

SPC100 said:

I consider it a non zero risk that your pension provider / broker / fund / investment plan provider could go bust.

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You are conflating a lot there.

It should not matter to you at all if your broker goes bust. She shouldn't have any of your money.

Not sure what you mean by "pension plan provider"

If you have a self administered pension fund, then you are protected.

Other than that, I think it's a life company and it is a non-zero risk, but as I have pointed out, it's fairly close to zero.

Brendan

Brendan Burgess said:

You are conflating a lot there.

It should not matter to you at all if your broker goes bust. She shouldn't have any of your money.

Not sure what you mean by "pension plan provider"

If you have a self administered pension fund, then you are protected.

Other than that, I think it's a life company and it is a non-zero risk, but as I have pointed out, it's fairly close to zero.

Brendan

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One of my pensions is non standard prsa with davy, davy (broker and pension plan provider), the nominee company, the fund provider (e.g. vanguard), the company the fund loans my equity too etc. There is a long chain of potential cases where my funds could suffer fraud, loss, or be stuck in a company that goes bust.

See below for my understanding of this from 2013.



Interestingly standard life at the time seemed to have some uk government guarantee.

can my annuity go bust or is there a government guarantee?

There is no explicit government guarantee
But is there an implicit one - past experience shows that the government has stepped in and provided funds when insurers went belly up and a large section of the electorate was affected. Of course, it then claws it back by charging all future insurance buyers a tax eg Quinn Insurance, PMPA, ... so in the end the taxpayer does not end up paying. Why is my insurance so expensive?

You can't guarantee anything in life, but it is extremely unlikely that one of the main pension providers in Ireland will go bust. They have consolidated to just 5 now, meaning they are even stronger than ever. All of the insurance companies are required as part of their regulation to hold assets that hold policyholder liabilities, a risk margin on top and an additional margin to protect against stress event. Most hold further assets in addition. It is all explained here

If you hold your money with some of the more niche providers, you need to do more due diligence. Is your money held in segregated accounts? Is there a custodian account? Can the provider trade on my account? The issue with Custom House Capital is they didn't segregate accounts and they acted like a discretionary fund manager and funneled client money into their property deals when they couldn't fill them with willing investors.

Cases like Equitable Life will not happen again as there are no longer any products offering guarantees like that. There may be a few legacy policies left but nothing to put a financial strain on a company.

Solvency levels of insurance companies and their solvency and financial condition reports are freely available. So, aside from a widespread fraud throughout the company, it is very unlikely that they will go bust.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)