THE move by Irish Life to restrict withdrawals from a major property fund it runs should not be a cause for alarm for pension savers, a leading financial adviser said.
rish Life is restricting investors taking money out of its €500m Irish Property Fund after a surge in withdrawals.
This is due to concerns about the outlook for the commercial property sector, especially as interest rates are rising so fast.
Large numbers of pension funds are understood to have money in the fund.
Vincent Digby, who is managing director of Dublin-based financial advisory firm Impartial Financial Advice, said the move was unsettling for pension fund savers and investors in the fund.
But he said it should not be a cause for alarm.
“While this is unsettling if you have your pension or other investments in the fund, the move is taken to ensure fair treatment for all investors.”
He said it will take time to sell properties to generate the liquidity required to open the fund again.
Temporary restrictions on withdrawals from property funds were put in place before after the Brexit vote and during the worst of the Covid pandemic.
It took over a year for some of them to open up again. But they did open up and customers could get their funds out, the adviser said.
Mr Digby said: “If your pension is due to be drawn down at your normal retirement date, you will not be effected by the closure.
“Irish Life will update you when the fund is open again and you can decide then if you want to transfer out.”
Irish Life said it has introduced a six-month notice period for withdrawal requests.
“The notice period allows time to make any property sales as required to pay future withdrawals, in a way that is fair to all of our Irish Property Fund customers,” it said. “Irish Life will contact customers to tell them about the notice period.”
Withdrawals across number of UK property funds have also been suspend in the past six months to prevent a stampede of exits.
Irish Life’s Exempt Property fund, which has €1.7bn assets under management, is not affected by the decision that applied to the Irish Property Fund.
“Our long term property outlook is favourable and unchanged,” Irish Life said. “We continue to see property as an important part of people’s pension and investment portfolios.”
Investors in two Aviva Life and Pensions commercial property funds were told in January 2020 that they could not withdraw their money for six months because of recent net outflows.
Aviva Life said at the time that it had a responsibility to treat all policy holders fairly and equitably in such circumstances.
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