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Losing all your pension

  • 17-10-2022 8:23pm
    Registered Users Posts: 932 ✭✭✭

    I'm have an AVC with Standard Life through an independent financial advisor. I've been paying into it for a few years. Recently I've been hearing stories about people who lose their entire pension fund to a rogue fund or broker. A man i met yesterday told me that each pension fund he went into called him after a while to tell him that the company had gone bust and all his money is gone.

    And a friend told me that his parents had pensions with irish life and they lost all of it during the recession.

    What are the chances of this actually happening? Are there protections in place to protect the money being put into these schemes now? I don't mind the value of the investment going down so much, but if there's a real risk of the investment fund company going bust and losing the entire pension, it doesn't seem like a good investment.

    Post edited by Jim2007 on


  • Registered Users Posts: 1,932 ✭✭✭beachhead

    If you are worried then contact Standard Life and not randomers telling stories.

    People who lost money in schemes didn't do their research properly,you're probably thinking of 2008-there were a lot "fantastic" investment oppurtunities being floated prior to the property/bank collapse.They were being pushed by respected organisations as well as individual brokers

  • Registered Users Posts: 1,875 ✭✭✭micar

    All values can fall as well as rise.

    You need to find out what funds you are invested in. Then look at the current fund fact sheets for each which should also show how the funds have been performing.

    Find out all the funds that you are able to invest in and have a look at the fund fact sheets for these.

    Have a chat with your financial advisor who can go through your risk profile, what you would like to achieve and who may recommend a change in fund choice.

    The higher the risk, the higher the rate of positive return but the there is also risk of large negative return.

    Don't let other peoples experience scare you. You've no idea what they were invested in.

  • Posts: 0 [Deleted User]

    Presumably you get your six-monthly reports from Standard Life and study how your funds are doing? If not, then why not? It's time to grow up and take responsibility for your own future.

  • Registered Users Posts: 932 ✭✭✭Yillan

  • Registered Users Posts: 932 ✭✭✭Yillan

    Thanks for the reassurance around not knowing what those who lost the entire value of their pension were invested in. That makes sense. I know what I'm invested in and how my fund is doing. My concern is around the supposed risk of losing my entire pension pot. I was wondering if this represents a real threat even when invested in a well diversified portfolio.

    If Standard Life were to go under type scenario it would possibly not matter what i was invested in if SL are holding my pension pot.

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  • Posts: 0 [Deleted User]

    Just to be clear up front here, I'm not by any means a financial expert in any field, I'm only giving you anecdotal advice. But my accountant told me that we have a state appointed "pension ombudsman" to prevent these things from happening and protect your pension fund. He assured me that the only people who lose money in "pensions" are putting it into semi legal unlicenced Ponzi schemes. If you are in a proper pension fund then you won't actually lose it, though I'm not 100% sure about how the value of it might go up and down.

    Now, if some other poster here has a qualification and knows better then I am prepared to accept that I misunderstood the advice given to me by an accountant, but that's how I read the situation at the time anyway.

  • Moderators, Business & Finance Moderators Posts: 9,795 Mod ✭✭✭✭Jim2007

    I don't know who you have been listening to, but you need to stop because they are untrue in relation to an actual pension fund. Pension funds are highly regulated to ensure that you will not loose you pension due to rogue funds or brokers. Yes of course it is true that you can loose money by investing in the wrong type of fund etc, but the chance of loosing money due to rogue behaviour is very small.

    If a company offering pension funds was to go broke, it would not matter to your pension fund because the assets in your pension fund do not form part of the assets of the company and can't be used to satisfy the debts of the company. In most cases the fund assets are physically held by a fiduciary company rather than by the assurance/insurance company itself.

    So long as you maintain a well balanced portfolio of the typical asset classes appropriate for a pension fund you should fair OK in the long term. But a word of warning here, I have at times been shocked at what some Irish people stuff into their pension fund as they are far too concentrated in a small open economy of the west coast of Europe to be low risk options.

  • Registered Users Posts: 5,598 ✭✭✭The J Stands for Jay

  • Moderators, Business & Finance Moderators Posts: 9,795 Mod ✭✭✭✭Jim2007

    I'd give them the benefit of the doubt. Part of the problem is that many people don't really understand about pension investing and some live in an information bubble where the belief is totally at variance with good investing practices.

    And the beliefs around property are particularly dangerous in this respect. In general having more that say 6% - 7% property in a portfolio marks it out as high risk, and that assumes that it is part of a well diversified fund. But some people go much higher than that and even put a single property into it. Or as I have seen last time around into so called private funds that turned out to hold only one or two properties in a very concentrated area or industry. And like wise with commodities like forestry and so on. And when it does wrong of course it's the pension's fault somehow. The problem is that they don't learn from this and neither do those around them, in fact they come away the complete wrong view.

  • Registered Users Posts: 5,598 ✭✭✭The J Stands for Jay

    I have seen people who have invested their entire pension into one residential property in Ireland, I've seen people who put everything in AIB, Anglo and BoI. None of them lost everything, despite coming close to it.

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  • Moderators, Business & Finance Moderators Posts: 9,795 Mod ✭✭✭✭Jim2007

    But not loosing everything is not the criteria you want to measure performance by. Most pension funds I know of had fully recovered within 2 or three years and went on to make further gains over the next decade while people I know in Ireland spent the decade waiting for a recovery in their property. Loosing a decade will have a significant impact in a pension.

  • Registered Users Posts: 25,232 ✭✭✭✭coylemj

    Anyone who put their entire pension into Anglo shares did lose everything - ask Seán Quinn.

    And if they were 100% into AIB, they came as near as makes no difference to losing everything. Think BoI took a big hit but not as much as the other two.

  • Moderators, Business & Finance Moderators Posts: 9,795 Mod ✭✭✭✭Jim2007

    It's worth pointing out that back then, bank shares were popular all over Europe with pensioners. They were considered solid income generating shares. And you had people like Brendan Burgess telling people to load up on them.

  • Registered Users Posts: 1,478 ✭✭✭kaymin

    In fairness, who could have predicted central banks would print money and reduce interest rates to zero or below for 10+ years - it basically ruined banks core business. This is reversing now and banks are once again becoming a cash cow.

  • Moderators, Business & Finance Moderators Posts: 9,795 Mod ✭✭✭✭Jim2007

    Nobody can predicted the outcome of a single investment decision that is why we advise people to hold a diversified portfolio and to concentrate on asset allocation not stock picking because our experience tells it is the most likely way people accumulate wealth.

    People who blame bad investment decisions on everyone but themselves are bound to repeat them and even worse they propagate those believes to others who then repeat the same mistakes. People lost a lot of wealth as a result of various property investments, which they blame on the banks, the bond holders etc… The failure to recognize their mistakes has resulted in people claiming that borrowing money, investing it in a property with an annualized return of 3% is a good investment!

    By the same token I have people telling me the equity investing is very risky, but when I examine their holdings it basically a collection of penny stocks and a couple of small caps that make up the Irish market. Most of which have no place in the average Joe or Mary’s portfolio.

    So bad equity investing decisions justify bad property investing decisions.

    All the while there are several well managed equity funds available to the general public, with annualized returns of around 12% - 15%. [I am not licensed to provide financial advice so I’m not going to recommend them, but a bit of googling should throw them up].

  • Moderators, Business & Finance Moderators Posts: 17,566 Mod ✭✭✭✭Henry Ford III

    I've seen geared property funds lose 100% of an investors money but these are really Russian roulette funds.

    If you have a reasonable level of diversification in your pension and the level of risk is appropriate to your investment objectives the chances of losing all your money are close to zero.

  • Registered Users Posts: 1,990 ✭✭✭Mongfinder General

    Is it possible to lose all of your money in a well diversified pension scheme? Yes. Is it likely. No.

    If an investment in a pension scheme that is managed by a regulated financial services provider goes south then it’s likely that a lot of people will be in the same boat. It would take a catastrophic event to drive the value of a regulated pension scheme to zero.

    if you’re investing in some type of unregulated product, this is a whole other story.

  • Registered Users Posts: 435 ✭✭Happyhouse22

    I think a lot of the scare stories are from defined benefit company pensions which are largely a thing of the last now.

    Then others come from people who invested with brokers into unregulated products.

    A third type of story comes from people who invested in something then pulled all their money out when the market was doing poorly and didn’t wait for it to grow again.

  • Registered Users Posts: 9,327 ✭✭✭Shedite27

    The people that lost their money tended to be the ones that were offered a "fantastic opportunity". They still exist, a big one went belly up in the past few years Dolphin Trust.

    It's the usual story, if something is too good to be true, it usually is. A pension with Standard Life (or any of the big houses in Ireland), in bonds and/or equities is safe from going bankrupt. Keep the pension simple. Most companies have "gamble funds" as I call them, things like Bulgarian property, these should only ever be 5% of a portfolio. If they collapse, you still have 95%, if they skyrocket, it can give a nice bump

  • Moderators, Business & Finance Moderators Posts: 9,795 Mod ✭✭✭✭Jim2007

    Well the Dolphin funds were something that should never have been in average Joe & Mary's portfolio. There is a fundamental problem with Irish investors or indeed most investors from Anglo Sphere countries - they have this idea that goes against all research: property is a low risk asset class, which it is not. If people had given it the respect it deserved - a high risk asset class, then they would have invested most likely a very low single digit percentage of their portfolio in it. Unfortunately Irish investors make great targets for these types of product.

    With regard to you mention of 5% in these funds, we usually go for about 7%, however it is important that this figure refers to all hight risk assets in the portfolio - property, commodities, etc... So the percentage in property would be much lower, may be 2%

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  • Registered Users Posts: 20,835 ✭✭✭✭Stark

    Make sure to go for the "lifestyling" option as well if you're with a standard pension provider. This means that while you're younger, your funds will be invested in higher risk asset classes which you'll need to beat inflation. The idea being if there's a crash and you're young, then there's time for the market to recover before you retire. As you get closer to retirement, you'll want to have your money progressively moving into lower risk asset classes in case there's a crash soon before you retire.