THE OFFICIAL MAGAZINE OF THE PROFESSIONAL INSURANCE BROKERS ASSOCIATION

INSIDE THIS ISSUE

The BrokerISSUE 35 WINTER 2011

Cutting through the Red Tape 10

Budget 2012 – Pensions Update 14

Budget 2012 – Key Changes 12

REGULARSChairman’s Remarks .......................................................... 1Editorial .................................................................................. 3PIBA CEO ............................................................................... 5PIBA Member Profile: Tara Wylie ........................................................................... 29Book, Blog & Website Reviews ................................... 30Crossword ........................................................................... 32

OTHER ARTICLESSomebody is going to get it Horribly Right ............. 7Efficient Markets – Illuminating but Not True ............................................ 15PIBA and New Ireland Investment and Pensions Seminars (photo spread) ............................ 16PIBA Service Excellence Awards (photo spread) .................................................................... 18A New Approach to Generating Income ............... 19Something for Everyone to Smile About! .............. 21Financial Services Claims ............................................. 22How to Maximise Fund Opportunities for Company Directors .................................................. 24Mortgage Market Update ........................................... 26Bailout .................................................................................. 27Standard Life Investments House View ................. 28

NEWSIndustry Round-up ............................................................. 8PIBA Update ...................................................................... 31

Source: Bloomberg (market capitalisation) and Standard & Poor’s (financial ratings) September 20th 2011. *Returns based on an independent survey September 2011. **Biggest refers to market capitalisation. †Financial rating is for the Zurich Financial Services Group. Zurich Life Assurance plc is regulated by the Central Bank of Ireland.

“A pension that’s ahead of the curve. That’s it. I’m moving to Zurich.”

Over the last ten challenging years, Zurich has been consistently the best performer* in the Irish marketplace. Here’s what we can provide your clients with:

The strength of the biggest company providing pensions and PRSAs in Ireland**.

The security of a world class AA- rating†.

A wide and diversified fund portfolio.

Unrivalled, award-winning customer service.

All things considered, can you think of a single reason why you wouldn’t recommend your clients move to Zurich? For more information, call your Zurich Life Broker Consultant.

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Committee MembersJarlath Jordan ChairmanPaul Cullen Vice-ChairmanPeter Breen SecretaryLiam Carberry TreasurerKevin MeehanMaurice HarnettDixie CollinsPhilip BrennanDonal Milmo-Penny

Sub-Committee ChairpersonsLife Paul CullenGeneral Maurice HarnettMortgage Peter BreenLegislation Philip Brennan

Chief Executive: Diarmuid Kelly

Our Broker Centre App provides instant access to your anywhere, anytime.

New Ireland Broker Centre AppTalk to your New Ireland Broker Consultant.

Lithographic Print

WHITE VERSION

New Ireland Assurance Company plc is regulated by the Central Bank of Ireland and is a member of the Bank of Ireland Group.

PIBA Single Page Ad.indd 1 29/11/2011 10:24

...building better business - together

The Broker148 Cashel Business Park, Cashel Road, Crumlin, Dublin 12Tel: (01) 492 2202 Fax: (01) 499 1550Email: info@piba.ie Website: www.piba.ie

Editorial Group John Hogan, Karl Deeter, Edel MoreyEditor Donal Milmo-Penny

Publisher: Salient Print Management, Naas, Co. Kildare. Tel: (045) 866057 & (087) 254 3463Design: Salient Print Management, Naas, Co. Kildare. Tel (045) 866057 & (087) 254 3463

Views expressed by contributors or correspondents are not necessarily those of PIBA or the Publisher and neither PIBA nor the Publisher accepts any responsibility whatsoever for them.

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Winter 2011 1Winter 2011 1

JARLATH JORDANPIBA Chairman

Chairman’s RemarksI love Christmas time.It is symbolic of the end of the present year and looking forward to the next, and of course respectful of the fact that it does not come without its pressures: usually financial, or to get more things done, or indeed to reach that year end business target.

And despite the fact that 2011 has been another terrible year for some people we should not forget this important time for our families, our friends and those in need of more care and attention. This is the good thing about Christmas: it is time for reflection and thoughts of these more important things in life, and of course Santa Claus for all!

We don’t need much of a reminder about 2011 for all the challenges it has placed on our people, but we do need to remind ourselves how resilient a people we are, and none more so than the self-employed Broker and the people working in the financial services industry. Our incomes are determined by what we do ourselves and how we can grow our business for the betterment of all. I am confident we will prevail.

We now have new challenges going into 2012 with the introduction of the new Consumer Protection Code; Fitness and Probity Regime and Minimum Competency Code. Our members must ensure that they are fully briefed on the changes they need to make to their business operations. PIBA is here to help you through these new requirements; and we plan to run smaller training workshops in more locations early in the New Year so that members and their staff will have more time to adapt and get trained on the new regulations.

I can assure you that PIBA will also continue with CPD bootcamp training and individual attention with regard to your own business. Please feel free to contact the PIBA office and our compliance team will help you with whatever query you have.

I would also like to take this opportunity to congratulate Irish Life on winning the PIBA Life service excellence award and to Zurich Insurance for winning the General Insurance award.

And finally I am back to thoughts of this lovely time of year again, so I would like to wish you and your family the very best this Christmas. May you enjoy the break and a Happy New Year to all.

Is mise, le meas,Jarlath Jordan

The BROKER

Issue 35.indd 1 09/12/2011 5:41 pm

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Canada Life House, Temple Road, Blackrock, Co. DublinTel: 01 210 2000 Fax: 01 210 2020 Web: www.canadalife.ie

Canada Life Assurance (Ireland) Limited is regulated by the Central Bank of Ireland.

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Winter 2011 3

03/11/2011 14:22:25

Winter 2011 3

DONAL MILMO-PENNYEditor

Editorial

THE PIBANUMBERHow do you see consumers’

perception of investment conditions changing in the coming three months?

I take PIBA for granted. I take it for granted that our organisation is well run; I take it for granted that when I pick up the phone to PIBA’s office I will be assisted, and to a very high standard: that‘s what makes PIBA great. Since becoming a little more involved, I have had the pleasure of dealing with some of the most energetic and professional people I have encountered in business. PIBA is all about action and sustained endeavour: action when a Broker needs support, proactive guidance on compliance, representation at the highest levels in our industry and on policy matters, advocacy and a powerful voice from the grassroots far beyond the capabilities of any of us as individuals. PIBA is a strong and vibrant body bringing benefit not only to its members but to the industry at large. In these testing times I find this reassuring.

Maybe our friends in Europe could take a leaf out of PIBA’s book and act in the interests of their members. I have rattled on for some time about Europe’s problems: the Euro, the crisis facing its member states, and the devastating effect on their people. There are solutions but their implementation needs leadership: at a European level we have none. Where is the Otto von Bismark, J.P. Morgan, Winston Churchill or Jacques Delors of our time? No matter what you think of these people, their politics or their ideological standpoints, they could lead. Today we need leadership, we need vision and we need action. We need the implementation of large ideas and decisions reaching beyond those of a narrow nationalistic nature. Ich bin ein Europäer … but only when it suits me.

The BROKER

8.8 %

52.7 %38.5 %

[A] Improving

[B] Staying the same

[C] Deteriorating

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ILA

908

5 (N

PI 1

0-11

)

IIIrrriiisssh h h LLLiiifffeeeyour number 1 supporter

Continually working hard to grow your business

Irish Life Assurance plc is regulated by the Central Bank of Ireland.

€200 million free cover giveaway Generating new leads for your business and highlighting the importance of life coverwww.bline.ie/your_number1_supporter.html

Pension Tension ConferenceThe pension policy conference of 2011www.bline.ie/your_number1_supporter.html

Protection CrusadeMulti million advertising campaign raising awareness and demand for life coverwww.bline.ie/your_number1_supporter.html

Big ideas DayPractical sales ideas for your business15 Sales ideas. 8 Campaigns in a can. 5 Online calculatorswww.bline.ie/your_number1_supporter.html

Pension Workshops10 reasons why Pensions still make senseOnline Pension Academy. 9 hours CPD – your CPD sorted!www.bline.ie/your_number1_supporter.html Better Done Elsewhere CompetitionAlways looking at ways to improve the things that matter most to youwww.bline.ie/your_number1_supporter.html

ILA 9085 (NPi 10-11)A4.indd 1 27/10/2011 11:46Issue 35.indd 4 09/12/2011 5:41 pm

ILA

908

5 (N

PI 1

0-11

)

IIIrrriiisssh h h LLLiiifffeeeyour number 1 supporter

Continually working hard to grow your business

Irish Life Assurance plc is regulated by the Central Bank of Ireland.

€200 million free cover giveaway Generating new leads for your business and highlighting the importance of life coverwww.bline.ie/your_number1_supporter.html

Pension Tension ConferenceThe pension policy conference of 2011www.bline.ie/your_number1_supporter.html

Protection CrusadeMulti million advertising campaign raising awareness and demand for life coverwww.bline.ie/your_number1_supporter.html

Big ideas DayPractical sales ideas for your business15 Sales ideas. 8 Campaigns in a can. 5 Online calculatorswww.bline.ie/your_number1_supporter.html

Pension Workshops10 reasons why Pensions still make senseOnline Pension Academy. 9 hours CPD – your CPD sorted!www.bline.ie/your_number1_supporter.html Better Done Elsewhere CompetitionAlways looking at ways to improve the things that matter most to youwww.bline.ie/your_number1_supporter.html

ILA 9085 (NPi 10-11)A4.indd 1 27/10/2011 11:46

It’s Only Money …You used to be able to write an economics related article safe in the knowledge that it was almost a timeless piece. Now with the daily monetary turbulence, this article may be irrelevant by the time it hits the streets. So apologies if the euro has already collapsed, or is fixed, but read on if we are still muddling through.

Basic to all monetary economics is the quantity theory of money and the ‘quantity equation’ (M x V = P x T): the V in that equation is the velocity of money or how many times per year does money turnover. Without overdoing theory, the key monetarist argument is that V is stable and therefore if you control the money supply, you control the price level and inflation (P).

A stable V implies a stable demand for money. In a modern economy, ‘money’ in its broadest definition is all cash and cash like assets (instant access, secure, liquid, low volatility); it includes all deposits of early redemption and some other assets which have the accessible, secure, guaranteed and liquid attributes. This is the ‘safety net’ or store of value function of money. Once people have enough safe money, they start to invest in other assets for higher return.

Whilst the demand for money is stable over the longer term, what we have seen in recent years is short run gyrations as investors grow increasingly wary of banking and sovereign crises. The Central Bank, as back stop of the financial system, sits on top of the liquidity pyramid and must respond to this in a way that keeps the system stable. In short it should create money and drain it from the system according to prevailing conditions. This it does by buying and selling assets (primarily government bonds) without sterilising, e.g. it buys Italian bonds from a bank and credits that bank with newly created euro in its account at the ECB; it does not seek to offset this by selling other assets (and cancelling the money created).

The issue here is that as liquidity is created, banks and people will diversify out of it and purchase other assets and goods which may cause inflation. It’s like snow building on top of the liquidity pyramid, which will eventually avalanche down onto the real economy. Most people would say “Chance would be a fine thing!”

The ECB is crippled by its fear of inflation, which is largely a throwback to the German fear of hyperinflation in the Weimar

Republic and post World War Two. It needs to discard this fear and realise that it has responsibility for seventeen nations (if not the world), and it does not exist to serve the interests of Germany.

It should aggressively intervene to kill uncertainty and in the process print as much money as is needed. The most efficient way of doing this would be to announce a ‘price’ for all sovereign bonds other than IMF patients at which it will buy e.g. equivalent to a 10 year yield of 4.5%. The market reaction would be that all ‘healthy’ sovereign bond yields would fall to 4.5% probably with limited direct purchases of bonds by the ECB. Other Central Banks could intervene in exchange rate markets to react to a euro sell off.

The banking system of the euro should be re-capitalised through government effort (again supported by the ‘price pledge’ from the ECB on sovereign bonds).

After a period of stability, the ECB should begin its exit strategy. By this point (6-12 months from now), recovery in lending and the real economy will begin to emerge.

The question at this point will be whether to allow inflation into the system. It may be impossible to avoid it as to get a fine tuned economic recovery from the mess we are in is probably beyond the skill of the best economists. However there might be a sense in which it is desirable to allow a moderate (5-6%) inflation to creep into the system for a number of years. It will allow for negative real interest rates to boost investment and re-invigorate the economy; it will boost the sovereigns by burning debt and allowing social welfare/public salary real cuts; it will also boost the position of negative equity mortgage holders and all debt holders (if interest rates are held low) and in the process help repair the balance sheets of banks.

It sounds so good, why are the Germans against it? Well apart from the ghosts of Reichs past, they are a creditor nation. Even as such, they must acknowledge that there are two sides to the over indebtedness equation and a moderate level of inflation may well allow an orderly process out of this. The alternative is an abyss in which they will also suffer.

I would like to thank all members for your support during 2011, and wish you and your families a happy and peaceful Christmas.

DIARMUID KELLYChief Executive

PIBA

Winter 2011 5

The BROKER

Issue 35.indd 5 09/12/2011 5:41 pm

would like to thank all of you for your

business and support in 2011. We wish you and

yours a Merry Christmas and a Happy New Year.

Happy Christmas to all our brokers,one and all

Friends First Life Assurance Company Limited is regulated by the Central Bank of Ireland.

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Winter 2011 7

would like to thank all of you for your

business and support in 2011. We wish you and

yours a Merry Christmas and a Happy New Year.

Happy Christmas to all our brokers,one and all

Friends First Life Assurance Company Limited is regulated by the Central Bank of Ireland.

The BROKER

EUNAN O’CARROLLSales & Marketing Director

Friends First

Somebody is going to get it Horribly RightThe financial services debate continues

2011 was a year in which, again, our industry simply stood still, and it is clear that life assurance companies are still struggling to cope with what is now accepted as a flawed business model.

The need to learn from other jurisdictions has never been greater. Changes are required if life companies are to remain relevant to consumers and independent Brokers. With fewer life companies in the market and the decreasing influence of local management, we can all assume that big changes are on the way in 2012 and the life companies’ status quo will finally be challenged.

The current Broker distribution model is floundering and everyone in the independent financial services arena needs to work together towards a common goal. The relationship, and in particular the agency agreement, between life companies and Brokers must be re-engineered. We need to work closely together to rebuild trust in our industry and position the Broker as the most trusted source of advice who can offer value-added products and services. Today’s political and regulatory focus on our industry should act as a catalyst for us all to bring about this vital transformation.

With consumer confidence at an all-time low and the business outlook far from positive, we must again raise public awareness of Brokers as the real source of trusted financial advice. Unbundling banking services from financial services remains a must and central to this is the education of consumers by the industry and regulators about the role of each industry participant.

Consumers need to clearly understand the different roles played by Brokers, life companies and the banks. There has never been a greater need for people to know where they should go for impartial advice on pensions, protection and inheritance tax; and where they should go for banking services such as current accounts, mortgages and personal loans. The Government needs to act now to level the playing field and ensure that the wounded banks always act in the interests of consumers.

As an industry at the crossroads, Ireland’s life assurance and pensions industry is in turmoil with falling demand for new policies, planned reductions to tax relief and impending changes to solvency requirements. We need to embrace new ways of working with consumers to build trust in financial services and call for a fundamental review of how financial services distribution works in Ireland.

Examining trends in new business sales illustrates the challenge. According to the industry sales measure of Annual Premium Equivalent (APE) – by no means an exact science – new sales have crashed by some 60% over the past four years. This might imply that all companies have been losing business, but the fact is that some are holding steady and others are growing modestly. How is this possible?

Despite these dark times, we should take a step back and look at the industry we all contribute to and have enjoyed working in for so many years. In the never-ending search for boasting rights on market share, we find ourselves in a situation where a portion of the premium in our market is simply going from one life company to another, like an unending circle, as a cosmetic barometer of success.

In contrast, in the UK – home to many of Ireland’s largest life companies – the FSA established the Retail Distribution Review (RDR) in 2006 as a way of improving the customer experience and giving consumers access to an unbiased, fully-informed advisory service that will guide them to an appropriate, bespoke investment plan, at a fair cost. Achieving such a worthy goal in a highly complex industry has not been easy and teething problems are being experienced by key players in the UK market.

In September 2011, Grant Thornton commissioned an independent research report to look at the impact of the RDR on product providers and the issues and implications for them. Our own industry will do well to learn from its findings.

We simply cannot ignore what’s happening in similar markets and how they are responding. If we don’t bring about changes that will benefit our indigenous industry, then we will be forced to accept changes which the parents of our larger life companies have adopted in their home territories.

There is a compelling need to embrace change and more efficient business selling methods and realise that trust and truly independent advice can play a central role in any strategic business offering. The life companies must take the lead but their Broker partners must also have a strong voice. We owe this to our Broker partners. This transition will not be easy and cash flow will always be a challenge. Eventually, however, the rewards will come as customers once again engage with us and show renewed belief in the value of Brokers’ independent expert advice and the role that life companies have to play in their financial security and prosperity.

2011 was a year where many adopted a perhaps understandable ‘head in the sand’ approach. But with the year drawing to a close, we must quickly evaluate the sustainability of the current business model, ask ourselves searching questions and show a willingness to make the necessary changes.

Despite the difficulties of 2011 we must all look forward to the future. The year ahead will be difficult, but all of us will do well to remember that change is nothing new to this industry and that the ability to adapt and remain relevant is well within our reach. There can be no doubt that those who accept the reality of the current market and demonstrate a willingness to change run the risk of getting it horribly right, and with it, the rewards of business success. For the rest, however, the financial services debate will continue and those that continue to participate without action will eventually become redundant.

“We need to work closely together to position the Broker as the most trusted

source of advice”

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8 Issue 35

Industry Round-Up

The BROKER

8 Issue 35

David Holton of PIBA – Office Heroes for BarnardosCongratulations to David Holton of PIBA for jumping out of a plane as part of the Insurance Institute of Ireland’s Office Heroes for Barnardos. David raised €1,625 for Barnardos – well done!

The Insurance Institute of Ireland have set themselves the challenging target of raising €50,000 for Barnardos as part of the Office Heroes for Barnardos programme, which runs from May 2011 until April 2012. There has been an extraordinary response to this challenge from members across the industry, with €27,500 raised to date.

Many companies have pledged their support including FBD, Chartis, New Ireland, PIBA, Ace, Thornton & Partners, Allianz, Willis Group, Brian J Pierce Ltd., Access Property Services, DAS and RSA.

Currently a celebratory finish to the year with Barnardos is being planned – to acknowledge the work undertaken by all the Office Hero companies and everyone who has donated during the year.

A Tag Rugby Tournament will take place after work on Thursday the 8th of March 2012. The winning team will be presented with the trophy by a member of the International Irish Rugby Team! Taking part will raise vital funds for Barnardos and help to reach the fundraising target of €50k.

For more information or to participate, please contact: Sinead Kavanagh on (01) 645 6604 or email at skavanagh@iii.ie.

Mortgage Interest ReliefThere was some positive news in the Budget for mortgage holders who took out loans between 2004 and 2008. The Government has fulfilled its commitment in the Programme for Government to increase mortgage interest relief to 30% for first-time buyers who purchased homes between 2004 and 2008; thereby doubling the relief available in most instances. The measure comes into force in 2012 and runs to 2017.

Individuals who take out qualifying loans in 2012 as first-time buyers will now receive relief at a rate of 25% in year one and two; 22.5% in year three, four and five and 20% in year six before the end date of 2017. Non-first-time buyers who take out qualifying loans in 2012 will continue to receive relief at a rate of 15%.

This news is welcome for many hard pressed current and potential home owners and these are realistic and meaningful measures to help alleviate some level of hardship.

ECB Interest Rate cutsThe ECB dropped its interest rate by 0.25% to 1.25% on the 3rd of November 2011. On the 8th of December 2011 the rate was decreased by a further 0.25% to 1%. Tracker mortgage holders will automatically benefit and will be notified of the change in their repayments by their lender.

Banks that passed on the November rate cut to variable mortgage holders included: permanent tsb, EBS, AIB, KBC Bank, Irish Nationwide and Bank of Scotland. At the time of going to press, permanent tsb had confirmed that they will pass on the December 0.25% rate cut to variable mortgage holders. EBS had confirmed that they will pass on a rate cut of 0.35% and Bank of Ireland had confirmed that they will pass on a rate cut of 0.15%.

Friends First Recognised for ExcellenceFriends First have retained their “European Recognised for Excellence” standard. They are the only Life Assurance company in Ireland to have achieved this standard of excellence. The standard is about putting quality and best practice into all aspects of the organisation. The awarding of the standard is independently assessed by EIQA (Excellence Ireland Quality Association) and EFQM (European Foundation of Quality Management).

Friends First has said that this commitment to excellence means the following for Brokers:

We continuously look at how we can improve the products and services we provide by acting on the ‘Continuous Improvement’ ideas put forward.

A quality checking system operates across all our customer service teams.

To ensure a consistent level of service when Brokers contact us we monitor, report and review key Customer Service metrics.

We listen regularly to Broker Feedback and act on suggestions.

Regular process reviews are undertaken to check they remain effective and efficient

Benchmarking with peers ensures our offerings are in line with market expectations.

Standard Life Survey – Irish women woefully under-pensioned

In a recent Standard Life survey only 37% of respondents, or just over one in three, have a pension in place.

When asked “which of the following do you have in place for your long term future?”

Almost half of women, or 47%, have cash/savings.

Just over 1/3 have a pension in place (37%). 29% have property in place. 22% have nothing in place or ‘don’t know’.

“It’s worrying that nearly one in four women has nothing in place for their long term future”, said Brendan Barr, Head of Marketing, Standard Life. “Negative pension policy changes from successive governments, culminating in the recent 0.6% levy imposed on private pensions, has not helped make them attractive.”

LEFTDavid Holton in full gear prior to his parachute jump in aid of Office Heroes for Barnardos

Issue 35.indd 8 09/12/2011 5:41 pm

Winter 2011 9

The BROKER

Winter 2011 9

The survey also shows that almost one third of women (31%) are more involved in their household’s financial decision making compared with three years ago when the recession started.

“Women are now keeping a closer eye on family savings and investment decisions,” said Brendan. “This re-enforces separate customer research which suggests that some women found their husbands/partners had taken higher risks with family finances during the boom than they should have.”

When asked on a scale of 1 to 10 how financially secure they felt, the average score was 4.8 (where 1 = totally insecure and 10 = totally secure). This is a serious fall from the ‘Celtic Tiger’ days of September 2007, when the average score was 6.5.

The most financially secure group are women aged 65+, who scored an average of 5.8. This older age group would appear to be least affected by the recession’s impact.

The least confident female age group are 45 to 54 year olds, scoring just 4.1 out of 10. This age group is probably the most hard-pressed, struggling with increased mortgage payments, possibly negative equity and children’s education.

Interestingly, women aged 25 to 34, with an average score of 5.0, appear to be more carefree financially.

On a regional basis Dublin women are the most confident, scoring 5.10, followed by women who live in Ulster/Connaught (4.8) and Munster at 4.7.

Insurance professionals get set for new requirements as Insurance Institute launches new prospectusIn a recent address to members of the Insurance Institute of Ireland (III), Bernard Sheridan, Director of Consumer Protection, Central Bank of Ireland, gave a summary of the revised Minimum Competency Code (MCC), incorporating the new Fitness and Probity requirements and the Consumer Protection Code 2012.

Under the existing MCC requirements, regulated firms have to ensure that all persons providing financial advice and services hold a recognised professional qualification or have gained experience through working in the industry for a specified period of time. Furthermore, this new Code now places responsibility on the person carrying out relevant functions in addition to their employer.

The introduction of the revised MCC has led to the creation of new modular routes to accreditation: the APA (Accredited Product Advisor), which will be offered for the first time in January 2012.

Speaking to the delegates attending the event, Professor Gerard McHugh, TCD and III Education Strategy Committee Chair, said: “The new 2012 Prospectus offers members and the industry a flexible, cost-effective, relevant and modular approach to getting started with their insurance qualifications, while meeting the requirements of the MCC.”

Friends First Budget 2012 An Assessment – Jim Power, Chief Economist, Friends First (extract below)Published December 7th 2011The fiscal background to Budget 2012 is straightforward but is also very challenging. In the eleven months to the end of November 2011, the Exchequer ran a deficit of €21.4 billion. €10.65 billion of this deficit is due to once-off payments relating to the banking system. When these payments are excluded the Exchequer deficit was €2.6 billion better than expected. Notwithstanding this, the fiscal challenge remains very intense, with most tax headings remaining under pressure and the task of reducing spending very difficult.

Overall tax revenues are €520 million behind expectations. Expenditure is being kept under control with both current and capital spending cumulatively €1 billion lower than anticipated. The Minister for Finance has laid out the broad fiscal parameters for the period 2012 to 2015. Based on what may turn out to be optimistic economic projections, the Government aims to deliver a package of €12.4 billion in fiscal austerity over the period. It is intended that expenditure reductions will account for 62.5 per cent of this massive fiscal adjustment, with tax and revenue raising measures accounting for the rest. In 2012 the correction will be in the region of €3.8 billion, with €1.6 billion coming in tax and revenue raising measures. In the Budget speech, GDP growth for 2012 has been revised down to 1.3%.

Following Budget 2012, current expenditure will be cut by €1,395 million, capital spending will be cut by €755 million, the tax changes are intended to raise €1,015 million, and PRSI changes are intended to raise €57 million. This gives a total of €3,222 million, but this rises to €3,822 million when the €600 million expected to be raised in 2012 as a result of the full-year effect of the changes introduced in Budget 2011 are factored in.

LEFT

Bernard Sheridan (Central Bank of Ireland) Philip Smith (President, Insurance Institute of Ireland)Malcolm Hughes (Insurance Institute of Ireland)

Issue 35.indd 9 09/12/2011 5:41 pm

The BROKER

10 Issue 35

The BROKER

ELIZABETH SMITHCompliance Manager

PIBA

Cutting through the Red TapeOver the past three months the Central Bank of Ireland has published the Minimum Competency Code, the Fitness and Probity standards and the revised Consumer Protection Code, so it is certainly a hectic time in the world of compliance and legislation! This outflux of changing regulatory requirements with such short implementation timeframes is daunting for intermediaries and indeed the whole industry. PIBA is committed to assisting and providing guidance to our members on how to respond to these developments and how to practically implement the required changes.

Minimum Competency Code 2011The revised Minimum Competency Code (MCC) was published on the 1st of September 2011 and came into effect on the 1st of December. The revised code enhances the minimum professional standards for all persons who provide consumers with financial advice and products or undertake certain specified functions. There was much relief within the industry when the new Minimum Competency Code was published revealing that the Central Bank of Ireland had decided that they would not be proceeding with their proposals to phase out the grandfathering arrangement.

The new code expands on the requirements set down by the previous code in relation to documentation of staff competency, certification of grandfathered status, new entrant requirements and completion of CPD. The assessment for grandfathering purposes and certification of experience may continue to be carried out up to the 31st of December 2012 subject to the individual meeting the four years’ experience requirement as at the 1st of January 2007 and having completed the required number of CPD hours from the 1st of January 2008.

All persons (qualified and grandfathered) are required to complete 15 formal hours of CPD annually, comprising of at least one hour of CPD in respect of each function that you undertake and at least one hour of CPD relating to ethics. The new code also includes new detailed supervision requirements for all new entrants, with stricter rules in relation to supervision by accredited individuals and completion of recognised qualifications.

Fitness and Probity Standards 2011In tandem with the publication of the MCC was the publication of the Fitness and Probity standards on the 1st of September 2011. The regulations specify two categories

of staff working in regulated entities that will be subject to the Standards: a person occupying a pre-approval controlled function (PCF); or a person occupying a controlled function (CF).

For insurance intermediaries, a person occupies a CF (controlled function) if they are involved in the direction and management of the intermediary and are responsible for mediation in respect of insurance products or involved directly in insurance mediation. This means that anyone advising and selling insurance products falls under the requirements and are deemed to hold a CF.

A PCF is in essence a sub-category of a CF. PCFs are generally at a more senior level within the regulated entity. The Regulations contain a detailed list of all PCFs. For intermediaries, the following persons within a regulated firm will perform a PCF:

Executive director

Non-executive director

Each member of a partnership

Sole trader

Head of compliance and anti-money laundering.

The Standards will gradually be introduced to allow firms the time to comply with the requirements:

1st of December 2011 for all persons occupying a PCF

1st of March 2012 for all new appointments to a CF (including new offers of employment and internal transfers/promotions); and

1st of December 2012 for all persons in existing CFs.

To comply with the Standards a person performing a CF or PCF is required to be:

competent and capable

honest, ethical and to act with integrity

financially sound.

Persons who are existing PCFs are not required to seek the Central Bank’s written approval to continue in those roles. Regulated entities are required to submit a list of persons carrying out specific PCFs to the Central Bank by the 31st of December 2011 – see Appendix 1, PIBA summary of the Fitness and Probity requirements.

Issue 35.indd 10 09/12/2011 5:41 pm

The BROKER

Winter 2011 11

From the 1st of December, individuals who wish to hold a PCF function will be required to seek pre-approval from the Central Bank of Ireland. Individuals seeking approval will be required to complete an online questionnaire. The proposing entity must be satisfied that the proposed individuals comply with the Standards before submitting the application to the Central Bank for approval. A regulated entity cannot appoint a person to a PCF unless the Central Bank has approved that appointment in writing.

A regulated entity must not allow a person to perform a CF or a PCF unless it is satisfied on reasonable grounds that the person complies with the Standards, and has agreed to abide by them. The Central Bank has issued draft guidance notes to the industry setting out the steps which firms are expected to take to comply with the requirements. It is expected that the finalised guidance notes will be published shortly.

Consumer Protection Code 2012The revised Consumer Protection Code was published on the 19th of October 2011 and comes into effect on the 1st of January 2012. The revised code contains a number of changes, some of which are outlined below:

Unsolicited contact – Personal or ‘doorstep’ visits are now prohibited unless the consumer has given informed consent to being contacted by the regulated entity by means of a personal visit. 

Regulated entities may contact potential and existing clients by telephone subject to requirements of the code which are similar in nature to the existing code.

The term ‘Broker’ may only be used where the principal regulated activities of the intermediary are provided on the basis of a fair analysis of the market – where an intermediary does not provide a product or service on the basis of a fair analysis of the market it must clearly disclose the name of the product producers whose products or services it intends to consider as part of its analysis.

The term ‘independent’ may only be used by an intermediary in its legal name, trading name or any other description of the firm where:

the principal regulated activities of the intermediary are provided on the basis of a fair analysis of the market; and

the intermediary allows the consumer the option to pay in full for its services by means of a fee.

Introduction of the term ‘vulnerable’ consumer – Intermediaries must now consider whether there is any evidence of vulnerability on the part of the consumer and must provide

those identified as vulnerable consumers with the necessary arrangements or assistance to facilitate their dealings with them. Examples of ‘vulnerable’ consumers are those with a vision or hearing impairment, or who have a lack of knowledge, experience or financial capability.

Increased product producer requirements – The Code requires product producers to give detailed information to intermediaries in relation to the investment products they sell on behalf of the product producers. This should aid intermediaries in assessing whether a product is suitable for a consumer.

Additional requirements are to be included in an intermediary’s Terms of Business.

More prescriptive requirements have been introduced in terms of the information that regulated entities must gather under the ‘Knowing the Consumer’ process, in order to assess whether a product or service is suitable for a particular consumer.

The following warning statement is to be included in all Statements of Suitability going forward:

IMPORTANT NOTICE – STATEMENT OF SUITABILITY This is an important document which sets out the reasons why the product(s) or service(s) offered or recommended is/are considered suitable, or the most suitable, for your particular needs, objectives and circumstances.

The Central Bank has indicated that inspections will take place in the first half of 2012 to ensure that firms are implementing the code in a timely manner. It is therefore important that members take the time to become familiar with these new publications to ensure that they are complying with all new requirements by the applicable implementation deadlines. PIBA will be running a series of eleven free nationwide seminars for our members in January/February, to provide detailed guidance on the implementation of the requirements.

Finally, PIBA does support balanced and proportionate regulation as we believe that it is essential to protect consumers, to protect honest companies and to uphold the integrity of the Irish Financial Services Industry. However, PIBA believes that it must be proportionate to the level of risk posed to consumers, something which we feel the Central Bank of Ireland has missed in the most recent flood of regulation.

Issue 35.indd 11 09/12/2011 5:41 pm

The BROKER

12 Issue 35

The BROKER

CRONA BRADYTax Manager

Grant Thornton

Budget 2012 – Key ChangesFinance Minister Michael Noonan revealed Budget 2012 on Tuesday the 6th of December: Ireland’s fifth austerity budget since 2009. While there was no increase in income tax rates or bands, the introduction of a €100 household charge for home owners, increased petrol and diesel prices, motor tax hikes and the rate of DIRT now standing at 30% mean that we are likely to remain a cash strapped nation following the Minister’s announcements.

The key points emanating from the Budget are as follows:

PensionsFurther changes were introduced from the 1st of January 2012 to add to the changes already introduced from the 1st of January 2011.

Employer PRSI relief from employee pension contributions will be removed from the 1st of January 2012

ARF assets transferred on the death of an ARF owner to a child of that owner (aged over 21) will be subject to tax at 30% (previously 20%)

The deemed annual distribution rate on ARFs has been increased from 5% to 6% where the aggregate asset value exceeds €2 million at the 31st of December 2012

The above has been extended to PRSAs, and where multiple PRSAs are held, the deemed distribution rate will apply to the aggregate values at the 31st of December 2012

No change so far has been made to the level of tax relief on pension contributions or to the threshold of the standard fund, which currently stands at €2.3 million.

Other points

DIRT has increased from 27% to 30%. With regard to the domicile levy which was introduced

in 2010 and applied to an individual who was domiciled in and a citizen of Ireland in that tax year, the citizen condition has been removed to prevent avoidance of the levy by renouncing Irish citizenship.

The exemption threshold for the USC has increased from €4,004 to €10,036 from the 1st of January 2012.

Capital taxes

The rate of capital gains tax and capital acquisitions tax has been increased from 25% to 30% with a reduction in the tax free threshold currently in existence between parents and children from €332,084 to €250,000.

Retirement relief will only apply for transfers by individuals of farms and businesses to their children between the ages of 55 and 66 years with certain transitional rules applying. Otherwise a ceiling of €3 million will apply on any transfers to a child where the individual is over 66 years.

To incentivise early disposals to third parties, the upper limit of €750,000 will be reduced to €500,000 for individuals over 66 years subject to transitional rules.

Property key points

The rate of stamp duty on all non residential property has been reduced from 6% to 2% for transactions that occur after Budget Day.

In an effort to aid individuals who purchased houses between 2004 and 2008, the rate of mortgage interest relief is to be increased to 30% for first time buyers.

To help stimulate the property market, the rate of mortgage interest relief will be 25% for first time buyers in 2012 and 15% for non-first time buyers in 2012. The relief will be closed to new claimants after the 31st of December 2012 and will have run its course by 2018.

Investors in accelerated capital allowances schemes will no longer be able to use property allowances beyond the original tax life of the relevant scheme where the tax life ends after the 1st of January 2015. Where the tax life ends before the 1st of January 2015, no carry-forward of allowances will be allowed into 2015 and beyond.

A 5% property relief surcharge imposed on investors with an annual income over €100,000 will apply to the amount of income sheltered by property reliefs (to include Section 23 reliefs) in a given tax year.

For property purchased between midnight on the 6th of December 2011 and the 31st of December 2013 and held for at least seven years, should a capital gain arise at the end of the seven year holding period, no capital gains tax will arise.

While some of the introductions detailed above will help struggling first time buyers repay their mortgages, there is little given in the way of help to thousands of individuals who may have invested in several properties which are in severe negative equity and who are struggling with their debt repayment. Coupling this with increasing living costs, this will continue to result in less disposable income being available for many individuals. Many find themselves in increasingly difficult cash flow positions which can often result in falling behind with debt repayments. With thousands of family owned companies in Ireland, it is now the reality that many directors are drawing down large salaries from their trading companies to fund their debt repayments. These salaries are suffering income tax at rates of up to 55%, which means that for every €100 withdrawn from the company, only €45 is left for debt repayment and other personal expenditure.

More and more directors are also taking loans from companies, and in times of fluctuating trading conditions may find themselves in breach of company law as a result of falling asset values in companies.

There are however possible solutions to the above problems which may be worth considering, particularly in light of the introduction of a reduced rate of stamp duty on commercial properties of 2%.

Issue 35.indd 12 09/12/2011 5:41 pm

The BROKER

Winter 2011 13

INFORMAL SCHEME OF ARRANGEMENT

Take the example of Mary and Patrick Smith, who purchased a commercial property located in Dublin City Centre in 2008 for €800,000. The level of debt attaching to the property is currently €400,000. The property is generating rental income; however it is not sufficient to service even the interest on the debt. Mary and Patrick estimate that the current value of the property is €400,000. They have had the property on the market for some time but have not found a buyer and are now under pressure from the bank to commence capital repayments on the loan.

Mary and Patrick hold the shares in their family company (FoodCo), which is involved in the food industry and is realising a modest profit. To fund the interest on the loan, large salaries are being drawn down by both Mary and Patrick, who are suffering huge taxes and are adding to the cash flow difficulties. To repay the debt in a more efficient manner, it is proposed that Mary and Patrick should incorporate a new Irish company (NewCo); and that company should purchase the property for Mary and Patrick for its current market value of €400,000. The consideration for the purchase could be the assumption of their existing debt, the drawdown of new facilities by NewCo; or it could be funded by cash reserves in FoodCo if such reserves were available. The repayment of debt could be funded by FoodCo by putting in place a golden share between NewCo and FoodCo to allow financing. The funds in FoodCo used to service the debt would have therefore only suffered corporation tax of 12.5% (or 25% at its maximum); and therefore increased funds are available for debt repayment. If FoodCo had €400,000 to purchase the property from Mary and Patrick, they could use the cash proceeds to repay their debt immediately. It is important to note that in this case as the value of the property is in line with the debt outstanding, a distribution issue does not arise for Mary and Patrick. If the debt were to exceed the value of the property the differential would be liable to income tax at marginal rates in the hands of Mary and Patrick. In these instances, consideration could be given to reducing the level of debt transferring.

The tax cost of such a structure would be stamp duty of €8,000 (€400,000 x 2%) for NewCo. No capital gains tax would arise for Mary and Patrick as the property is valued at much less than its original purchase price. NewCo would receive the rental income going forward, which would suffer tax at 25% (subject to close company provisions), which is less than the current rate of 52% in the hands of Mary and Patrick.

Directors’ LoanThe above could also be used to rectify a directors’ loan problem where the amount of the loan outstanding exceeds 10% of the net asset value of the company. The directors are therefore in breach of company law, which can result in the company auditor having to make a report to the ODCE, which in turn can result in severe penalties for the director. Taking the above example, if Mary and Patrick had directors’ loans of €400,000 or less which were in breach of company law, they could sell the property to the company for cash consideration

and the directors’ loan could be written off. Alternatively other properties may be used to rectify the problem. Where the company does not have sufficient cash reserves to purchase the property, there is a mechanism that can be used to pay the consideration in stages to Mary and Patrick and the directors’ loan could be repaid using a circular movement of funds.

In conclusion, the above could be considered a simple solution to aid the debt burden on many individuals which could result in improved cash flows and less hardship.

Issue 35.indd 13 09/12/2011 5:41 pm

The BROKER

14 Issue 35

The BROKER

TONY GILHAWLEYTechnical Guidance Ltd.

Budget 2012 – Pensions UpdateNo change in personal pension tax relief for 2012While the original deal with the Troika required a phased reduction in pension tax relief from marginal rate to 34% relief in 2012, 27% in 2013 and 20% in 2014, the Government have decided not to reduce relief in 2012, pending a review with interested parties on ways to invest more pension funds in Ireland.The Minister for Finance said:

Due to the changes in pension tax relief adopted in last year’s Budget and Finance Act 2011 and the pension fund levy required to fund the Jobs Initiative, the pensions sector is making a sizeable contribution of about €750 million in 2012. Although the EU/IMF Programme commits us to move to standard rate relief on pension contributions, I do not propose to do this or make changes to the existing marginal rate relief at this time.However, the incentive regime for supplementary pension provision will have to be reformed to make the system sustainable and more equitable over the long term. My Department and the Revenue Commissioners will work with the various stakeholders in the next year to develop workable solutions. This will include consultation on whether and to what degree Pension Funds might invest more in Ireland, rather than abroad.

ARF imputed distribution rate to be increased to 6% for ARFs > €2mThe current 5% ARF imputed distribution rate will increase to 6% in 2012 for ARFs valued at more than €2m on the 31st of December 2012. The 5% rate continues for ARFs that are valued at less than €2m.

Where an individual owns more than one ARF, the aggregate value of his or her ARFs will count towards the €2m limit.

Vested PRSAs to become subject to imputed distributionsUp to now vested PRSAs, i.e. a PRSA where the individual had taken a tax free lump sum but left the balance in the PRSA, were not subject to the 5% imputed distribution applying to ARFs. In 2012 vested PRSAs will be subject to exactly the same imputed distribution requirement as apples to ARFs. Therefore from 2012 onwards, vested PRSAs will not have any tax advantage over ARFs.

Reduced entitlement to the State Widows/Widowers PensionCurrently a new widow or widower can qualify for the State Widows/Widowers Pension of up to €193.50 pw + €29.80 pw for each child, if they or their deceased spouse had paid at least three years’ PRSI contributions. However with effect from July 2013, new widows or widowers (or their deceased spouse) will have to have paid at least 10 years’ PRSI contributions in order to qualify for the pension.This will mean that young married couples may have far less protection from the State should one of them die; those affected will therefore have a greater need for life assurance protection.

Reduced State Contributory Pensions for someSome clients who will qualify for the State Contributory Pension from September 2012 onwards may get a lower State Pension than they had anticipated if they have a broken PRSI contribution record during their lifetime, e.g. a married woman who gave up work for a period to look after children, and then returned to work.

This Table shows the reduced pensions payable to new retirees from September 2012 onwards, who will have an average annual PRSI contribution record of less than 40 weeks:

Avg. PRSI Contributions Present Sept. 2012 48+ €230.30 €230.30 40–47 €225.80 €225.80 30–39 €225.80 €207.00 (– €18.80) 20–29 €225.80 €196.00 (– €29.80)

Exit Tax rate increases to 33%The exit tax rate applying to gains realised (including the deemed 8-yearly encashment) on life policies and unit trusts etc., will increase from 30% to 33% with effect from the 1st of January 2012.Clients with investment gains on policies or unit trusts, who intended making a partial or total encashment shortly, might consider making such an encashment before the 31st of December 2011 to benefit from a lower 30% exit tax rate.

DIRT rate increased to 30%; deposit interest to be subject to PRSIThe normal DIRT rate will increase from 27% to 30% with effect from the 1st of January 2012 onwards. The DIRT rate applying to deposit tracker bonds increases from the same date to 33%.

Deposit interest will become subject to normal PRSI @ 4% with effect from 2013 for employees; PRSI has always applied to self employed Class S PRSI.

Deposit tracker bonds maturing in 2013 onwards will therefore carry an effective total tax rate of 33% (DIRT) + 4% (PRSI) = 37%, compared to the 33% exit tax rate applying to life assurance tracker bonds.Therefore life assurance tracker bonds have become more tax efficient than direct deposit tracker bonds, for investors paying PRSI and unable to reclaim DIRT.

Inheritance Tax rate increased to 30% and parent/child threshold reduced to €250,000The Inheritance Tax rate is being increased from 25% to 30% and the parent/child threshold of €332,084 reduced to €250,000 with effect from the 6th of December 2011.

The impact is to widen the range of inheritances subject to Inheritance Tax and to increase significantly the amount of tax payable.

See the comparison of Inheritance Tax liabilities applying in 2008 to the tax liability applying from the 6th of December 2011 onwards for the same inheritance amount:

Inheritance 2008 05/12/2011 06/12/2011 300,000 0 0 15,000 500,000 0 41,979 75,000 750,000 45,758 104,479 150,000 1,000,000 95,758 166,979 225,000 2,000,000 295,758 416,979 525,000 3,000,000 495,758 666,979 825,000 4,000,000 695,758 916,979 1,125,000 5,000,000 895,758 1,166,979 1,425,000

In addition a new higher 30% tax rate is to apply to ARF inheritances left to children over the age of 21; previously such inheritances were subject to a flat 20% (standard rate income tax) charge. Therefore clients may need to review their potential Inheritance/ARF Tax exposure and Section 60 life assurance cover provision.

Issue 35.indd 14 09/12/2011 5:41 pm

The BROKER

Winter 2011 15

GARY CONNOLLYPrincipal

iCubed

Efficient Markets – Illuminating but Not TrueIf I was having an affair, there is a reasonably high possibility that I would be sneaking around. That is not the same as saying that if I am sneaking around, there is a high possibility I am having an affair. This is a common mistake: a mistake I think is often made by proponents of market efficiency, the investment implications of which are profound.

Let me elucidate a little further on the confusion around the logic of this, before specifically dealing with the idea of why an acceptance of market efficiency is dangerous.

The appeal of many conspiracy theories rests on the misunderstanding of the logic above. But there is much more sinister side to the misunderstanding of ‘conditional probability’ – invented by Thomas Bayes to help deal with probabilities where two events are connected rather than independent. Consider an infamous trial in Los Angeles during the 1990’s. The defence attorneys were let away with an egregious misinterpretation of statistics. They argued that four million women in the US are beaten by their spouses, but only one in 2,500 goes on to be killed by their abuser. That is correct. But it is a misinterpretation of the statistics. The relevant number is the probability that a victim of domestic violence that is murdered (as was the case here) was murdered by their abuser. Amazingly, figures for this show it to be 90%. Notwithstanding this, the defendant was acquitted.

So what has this got to do with investment? Proponents of efficient markets often rely on the following argument to back up their claims: markets are efficient, for if this

wasn’t the case, then we would see large numbers of active managers consistently beating the markets. Yes, if markets were actually efficient, you would indeed expect to observe mass failure of active management. But let’s not fall for that one. This is a misinterpretation of the statistics.

Capital markets efficiently price assets via a process which is very distinct from saying that efficient prices exist as a condition of capital markets. It is true that the majority of active managers fail to consistently beat their benchmarks. The Value

Investment Institute (www.valueinstitute.org) wrote a recent article on market efficiency which highlights the reasons for this. Of the reasons cited, the most prominent one is the lack of incentive to outperform. Managers are paid a management fee which grows in line with the fund. At a certain size, it makes more sense to hold on to existing business than risk redemptions if performance falls off for a short period. ‘Active’ managers end up engineering portfolios to look like the benchmark and give themselves little chance of adding value.

One of the conclusions from an acceptance of market efficiency is that the most efficient allocation of capital for a passive investor is considered to be the standard market capitalisation weighted index.

As an investor your starting point should be to own more of the assets that you expect to deliver the best returns. If you invest passively in a traditional index you will end up owning twice as much in an asset whose price has recently doubled in value. To a proponent of value investing, this is a perversion of investment strategy.

The belief in market efficiency and many of its offshoots has conditioned investors to rely on many faulty financial constructs in making investment decisions. Whatever about the debate on whether or not markets are efficient, the other simplifying assumptions in finance models are so comprehensively incorrect that investors are in danger of being badly burned and aren’t even aware of it.

The Capital Asset Pricing Model and Modern Portfolio Theory have been the basis for constructing portfolios for generations. All of these models are derived from the world of physics where the subject matter is electrons and neutrons. The subject matter of economics and finance is you and me – mere homo sapiens. While it’s possible to predict the movement of a particle within an atom to several decimal places, we humans are less predictable. The simplifying assumptions that we are always rational and risk averse to name but a few, are patently wrong. Several different tests repeatedly show that the assumption of rational decision making is wrong.

So what is the big deal? Despite the widely accepted shortcomings of these models, they remain the bedrock of finance and continue to be taught in business schools. There are dangers created from the unthinking application of models which make simplifying assumptions.

The oft used response is that “It isn’t perfect but there isn’t anything better”. This is not good enough. If a pilot’s altimeter is faulty, a passenger would prefer him or her to have a look out the window rather than make do with the reading on the dial. This analogy used by Nassim Taleb says it all. There is no alternative or replacement model. We must accept the limitations of trying to apply the principles of physics to a social science.

Investment is more ‘Art’ than it is ‘Science’. Physics may have three laws (Newton’s) to explain 99% of physical phenomena. But as Andrew Lo says, “In finance we have 99 laws that explain 3% of economic phenomena”. Investing successfully is difficult, and so it should be. Do not retire your qualitative judgement in the face of a number from a model. There is much to be learnt from the Efficient Markets Hypothesis, so long as you don’t believe in it.

Gary Connolly is principal of iCubed, an investment training, research and consulting firm, www.icubed.ie. He is also chairman of the Value Invest-ment Institute. He can be contacted at gary@icubed.ie.

“Investing successfully is

difficult, and so it should be.”

Issue 35.indd 15 09/12/2011 5:41 pm

, and , New Ireland Assurance

, Financial Innovations Ltd.

, New Ireland Assurance, SMP Financial

, New Ireland Assurance

, , Christy McGee Insurances Ltd.

, New Ireland Assurance, Christy McGee Insurances Ltd.

and, New Ireland Assurance PIBA Trinity College Dublin

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and McGeary Financial Services

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& Pensions Co. Ltd. New Ireland Assurance

, BRM Financial Services, New Ireland Assurance

New Ireland Assurance Company plc is regulated by the Central Bank of Ireland and is a member of the Bank of Ireland Group.

❞

❞

PIBA GateFold Ad.indd 1-2 08/12/2011 16:35Issue 35.indd 16 09/12/2011 5:41 pm

, and , New Ireland Assurance

, Financial Innovations Ltd.

, New Ireland Assurance, SMP Financial

, New Ireland Assurance

, , Christy McGee Insurances Ltd.

, New Ireland Assurance, Christy McGee Insurances Ltd.

and, New Ireland Assurance PIBA Trinity College Dublin

New Ireland Assurance

and McGeary Financial Services

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Financial Services, Hastings Financial Services

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, New Ireland Assurance

and , New Ireland Assurance

, PIBA, New Ireland Assurance

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& Pensions Co. Ltd. New Ireland Assurance

, BRM Financial Services, New Ireland Assurance

New Ireland Assurance Company plc is regulated by the Central Bank of Ireland and is a member of the Bank of Ireland Group.

❞

❞

PIBA GateFold Ad.indd 1-2 08/12/2011 16:35Issue 35.indd 17 09/12/2011 5:41 pm

The BROKERThe BROKER

18 Issue 35

PIBA Service Excellence Awards 2011 WINNER OF THE LIFE ASSURANCE AWARD 2011 Irish Life WINNER OF THE GENERAL ASSURANCE AWARD 2011 Zurich Insurance plc

Gary Ellison (Ellison Financial Consultants), Declan O’Neill (DON Consultancy), Pádraic McKenna (Aviva Life & Pensions)

Diarmuid Kelly (PIBA CEO), Jarlath Jordan (PIBA Chairman) and Irish Life

Mick Quinn, Brendan Coyle, Mark Shannon (Canada Life)

Jarlath Jordan (PIBA Chairman) Tony Lawless (General Manager – Brokerage, Irish Life)

Jarlath Jordan (PIBA Chairman) Ken Norgrove (CEO, Zurich Insurance plc)

Michael Cosgrave (Aviva Life & Pensions) Colin Leahy, Colum O’Brien (Zurich Life & Pensions)

Jarlath Jordan (PIBA Chairman) Tony Lawless (General Manager – Brokerage, Irish Life) Ken Norgrove (CEO, Zurich Insurance plc), Diarmuid Kelly (PIBA CEO)

Pat McEntee (PGM Financial Services) Liam Carberry (Liam Carberry Financial Planning Services) Garrett Howard (Aviva General)

Issue 35.indd 18 09/12/2011 5:41 pm

The BROKER

“This divergence has only

happened twice since the 1950’s.”

Winter 2011 19

The BROKER

MICHAEL HAYESInvestment Development Manager

Canada Life

A New Approach to Generating IncomeWith cash returns and interest rates remaining at historic lows investors looking for income from their investments are having to look harder to find it. As most expectations are for global growth to remain muted in the short term, this environment is unlikely to change anytime soon. Investors may have to look beyond traditional sources to derive income from their investments. While the debate continues about where we are in this current cycle, about whether another recession is possible, and while the sovereign debt questions remain, it is expected that GDP growth and most asset returns will grow at a relatively slow pace over the next few years.

While the global economic picture is uncertain many companies may be sitting on significant levels of cash; and with dividend payout ratios below historic averages they could well increase from this point. With the current stock yields in many cases above ten year bonds there is significant income and growth potential from dividend paying companies; for example, the US S&P 500 is currently yielding about 2.4% vs. the ten year US treasury bond at 1.9%. This divergence has only happened twice since the 1950’s. Investors in dividend paying companies will be putting pressure on company management to increase dividend payouts to compensate them for lower expected stock returns. Historically, during periods of low interest rates and slower global growth high yielding equities have outperformed other asset classes.

So with investors searching for income, what other options beyond the traditional ones do they have? We have just launched our new Canada Life/ Setanta Income Opportunities Fund, which is managed using a unique income generating strategy from a variety of global assets.

The Income Opportunities Fund aims to deliver income and real returns by applying a dedicated value investment philosophy to multiple asset classes. The dominant asset class in the fund is expected to be equities in the form of a portfolio of stocks anticipated to generate a high yield. The fund also has the ability to invest in other income-bearing asset classes such as bonds, property and cash where a compelling value investment case can be made. We believe that investors should focus on the real rather than the nominal value of their investments and have decided that the benchmark for the fund is to beat inflation rather than some other asset based benchmark.

The fund managers will set an income target at the start of each year. In setting this income target, the fund managers will consider the income yield potential of the various asset classes. In addition, for equities the fund will also generate

income from an equity options strategy called a covered call options strategy. The fund manager has been running global options strategy since 2004. This type of strategy builds on Setanta’s successful experience of managing high yield equity style funds since 2003.

We do expect that the dominant asset class in the fund will be equities in the form of a portfolio of high dividend-yielding stocks, but should equities prove less attractive than other asset classes (based on an assessment of the valuation of the assets and their income yield) the fund has the ability not to hold any equities and to invest in other asset classes for income. For all asset classes, the sustainability of the income generated is assessed in conjunction with the financial strength of the underlying asset.

Income has shown to be a significant element of total return to investors over time. Although price movements tend to make the headlines it is the steady payment of dividends, interest and rents, and the reinvestment of this income that can be one of the main components of total return.

When we consider the words of Benjamin Graham, a pioneer of value investing, on the topic of when to buy equities and the importance of dividend returns, it is clear to see that he believed dividends to be a vital component of value investing: “Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.” Source: ‘The Intelligent Investor’ by Benjamin Graham (revised publication 1973).

This new fund is available across the current Canada Life product range and we believe it could prove attractive for ARF investors who are looking to generate income to meet their 5% imputed drawdown requirements. While the search for income has now become more of a challenge than before, the Canada Life/ Setanta Income Opportunities Fund is an option for your clients looking for income and the potential to make real returns.

The Canada Life Assurance Company and Canada Life Assurance (Ireland) Limited are regulated by the Central Bank of Ireland.

This article does not constitute advice or an advertisement and does not form part of any contract.

Issue 35.indd 19 09/12/2011 5:41 pm

We look forward to continuing to work together in 2012

We would like to take this opportunity to thank you for your continued support during 2011 and wish you and yours the very best for Christmas and the New Year.

Christmas closing times

Aviva offi ces will be closed during the Christmas season on 26, 27 and 28 December as well as 2 January 2012.

However, Aviva Health Broker Support Line - 1890 716 716 will be open on 28 December from 8am to 8pm.

And don’t forget you can log on to www.avivabroker.ie at any time for all your information needs.

Season’s greetings from all at Aviva

Aviva Insurance Europe SE is regulated by the Central Bank of Ireland.Aviva Life & Pensions Ireland Limited is regulated by the Central Bank of Ireland.Aviva Health Insurance Ireland Limited is regulated by the Central Bank of Ireland.

Aviva offi ces will be closed during the Christmas season on 2 January 2012.

1890 716 716

www.avivabroker.ie

Issue 35.indd 20 09/12/2011 5:41 pm

Winter 2011 21

The BROKER

We look forward to continuing to work together in 2012

We would like to take this opportunity to thank you for your continued support during 2011 and wish you and yours the very best for Christmas and the New Year.

Christmas closing times

Aviva offi ces will be closed during the Christmas season on 26, 27 and 28 December as well as 2 January 2012.

However, Aviva Health Broker Support Line - 1890 716 716 will be open on 28 December from 8am to 8pm.

And don’t forget you can log on to www.avivabroker.ie at any time for all your information needs.

Season’s greetings from all at Aviva

Aviva Insurance Europe SE is regulated by the Central Bank of Ireland.Aviva Life & Pensions Ireland Limited is regulated by the Central Bank of Ireland.Aviva Health Insurance Ireland Limited is regulated by the Central Bank of Ireland.

Aviva offi ces will be closed during the Christmas season on 2 January 2012.

1890 716 716

www.avivabroker.ie

GREG DYERHead of Sales & Marketing

Caledonian Life

Something for Everyone to Smile About!Caledonian Life has been busy at work ‘behind the scenes’ over the last number of months … the result of which is that we are now offering a wider platform of benefits to our Brokers and their clients, in the areas that really matter to them. 2011 saw us become part of the Royal London Group – a company that understands Brokers. So since November, with their backing and our local knowledge, we have begun to roll out a range of new initiatives with the aim of helping to meet your business needs and requirements. More to the point, these initiatives have been designed using Broker feedback to deliver what we hope you will see as leading price, product and commission offerings, to help you in these challenging times.

With this in mind, Caledonian Life was, and indeed is, delighted to announce the following advancements and benefits, that we are confident will assist Brokers and their clients throughout the country.

SO — WHAT HAVE WE DONE?

Something for your Clients — We’ve extended our price matching initiative to include our

specified serious illness product – so you can now guarantee your clients that Caledonian Life can offer the cheapest premiums on the market for term, mortgage protection, and now also specified serious illness cover.*

We’ve also revamped our specified serious illness product, which now covers 44 serious illnesses and 13 partial payments.

We have added a whole range of new benefits to our protection products, such as the option following special events to increase your level of life and/or specified serious illness cover without providing further medical evidence, terminal illness benefit (prepayment of life cover), children’s life cover, and children’s specified serious illness cover. All of which means that we now offer one of the best and most comprehensive protection propositions on the market.

Something for you — Very importantly in these financially formidable times, we now

offer you the option to choose from six new commission options, with a choice of indemnity or non-indemnity, and three rates of payment of 133%, 160% and 180%. This allows you to decide on an individual case and policy basis what suits you and your individual business needs best.**

We’ve also upgraded our Brokers’ centre, eSP, with new additions such as access to real-time tracking of new business applications, online access to existing policy details, and up-to-date with-profits bond values.

Something for everyone —

We’re now part of the Royal London Group. So as well as offering your clients excellent products and prices, they can rest assured that they’re now under the protection of the largest mutual life and pensions provider in the UK, plus the peace of mind that comes from also being covered by the Financial Services Compensation

Scheme. They are a company that even in the face of the extreme market and economic turmoil of recent years, actually expanded their operations in the UK and Ireland in a prudent and thoughtful way. They have also substantially grown their new business levels and profitability and increased their funds under management to €51 billion (30/09/2011), whilst all the time improving their financial strength ratings from independent external agencies. Which is a nice thing to be able to say about any company these days.

Caledonian Life are an ambitious company who are committed to growing and developing our business and proposition in tandem with our Broker business partners. As many of you will remember from having being involved in them, over the last twelve months we undertook a series of nationwide focus groups, surveys and one to one meetings. We can genuinely say that our new offerings were shaped by this interaction and the innovative insights and ideas we received from Brokers. We know we had work to do, and we still have further to go, so we intend continuing this evolutionary development process over the months and years to come.

We also know that it’s a tough environment out there for Brokers, so we believe you’ll see these new initiatives as genuinely good news and positive advancements from Caledonian Life, for both you and your clients. Most importantly and on behalf of Caledonian Life, thank you for your support over the years and we hope that these new developments and the impending seasonal celebrations give you something to smile about!

For more information on these developments log onto esp.caledonianlife.ie or contact your Caledonian Life Broker Consultant.

* Limits apply.

** Terms and conditions apply. New commission terms and options only apply to eSP applications. These initiatives (commission and price matching) can be withdrawn at any time. The availability of the indem-nity commission options is subject to Caledonian Life’s prior approval and authorisation based on a number of qualifying criteria. Should you wish to apply for indemnity commission please contact your Broker Consultant.

Issue 35.indd 21 09/12/2011 5:41 pm

The BROKER

22 Issue 35

FlexAd_PIBADec2011 25/11/11 11:04 Page 1

The BROKER

KIERAN McHUGHCEO

Lockton International

Financial Services ClaimsWith the downturn in the economy, claims against financial institutions, financial advisors, and promoters of financial products have increased significantly in the past twelve months. Many investors have found the value of the capital invested has been reduced or lost entirely and as a result everyone has been subjected to a greater level of scrutiny. In addition to any contractual or statutory duties, advisors also owe a duty of care to their clients. As a result they can be sued for any negligent advice or misrepresentation which results in a loss.

Statutory Instrument no. 60 was signed into law in November 2007 and placed many of the duties that exist at common law on a statutory footing together with additional duties. For example investment firms are required to: “act honestly, fairly and professionally in accordance with the best interests of its clients”.

In addition investment firms must: “ensure all information addressed to the client or potential client is fair clear and not misleading”.

Clients can seek redress through the Financial Services Ombudsman (FSO) or through litigation.

The bulk of recent civil claims arise from the following:

1. Mis-selling of financial products.

2. Failure to explain the terms of the product properly.

3. Misleading or false representations.

4. Failure to maintain up-to-date investment mandates and failure to invest as mandated.

5. Selecting investment products inappropriate to risk appetites.

6. Conflicts where acting as both the promoter and manager at the same time.

7. Fraudulent activity such as misappropriation of client funds and alleged ‘ponzi’ schemes.

There were 2,584 complaints to the FSO against banks in 2010. Mis-selling of financial products accounted for over 37% of complaints to the FSO from 2007 to 2010.

Financial advisors must obtain appropriate know your client information such as age, dependents, available income, existing investments/potential liabilities, investment experience/objectives and risk appetite before recommending a financial product.

There have been a number of cases involving mis-selling in recent years. A case involving Kilmartin v Bank of Ireland involved two pensioners in their 70s who were advised to take out a 15-year endowment mortgage. A total award of €16k was made.

There have also been several cases taken in the High Court involving bonds, e.g. SMDF v Bloxhams where 97% of the value in a Saturn bond was lost. There were a number of other sets of proceedings issued over the same bond.

In separate proceedings over 400 investors are suing ACC in connection with their World Bond series. These were leveraged bonds: while capital was guaranteed most investors borrowed to buy the bonds. Losses arising from the interest repayments are being claimed. These cases are ongoing.

The Financial Regulator is responsible for regulatory enforcement. Claimants cannot obtain compensation through the Regulator but complaints can be referred to it by the FSO for investigation. Any such investigation can have serious consequences such as loss of authorisation to trade or to provide investment advice. It can also be placed into liquidation as has happened recently in the Custom House Capital case.

Given the current climate PIBA members may find themselves being sued and it is important that the correct steps are taken to ensure the matter is handled correctly and expeditiously.

Claims Handling – A number of Do’s and Don’ts DO report any matter which you believe might give rise to a

claim as soon as you become aware of it. DO on receipt of a letter from a solicitor or the FSO send a

copy to your Insurance Broker / insurer. DO send a full copy of all the paperwork relating to the

client matter referred to to assist in your defence. DO cooperate fully with any solicitor appointed by insurers

to act on your behalf. DO expect the process to be stressful. No one likes being

sued and it is not a pleasant experience. DO NOT respond directly to any communication received

without clearance from your insurer. DO NOT admit liability or make any comment on any

allegation spurious or otherwise. DO NOT wait until your renewal date to report any matter.

Immediate reporting is essential.

For further information contact Kieran McHugh, CEO Lockton International, at (01) 858 5200 or Kieran.mchugh@ie.lockton.com.

Issue 35.indd 22 09/12/2011 5:41 pm

FlexAd_PIBADec2011 25/11/11 11:04 Page 1

Issue 35.indd 23 09/12/2011 5:41 pm

The BROKER

24 Issue 35

The BROKER

KENNY MELLORPensions Product Manager

Irish Life

How to Maximise Fund Opportunities for Company DirectorsBy the time you read this article you will, hopefully, be bearing the fruits of the hard work you’ve put in to help your clients reduce their personal tax liability for 2011 and increase their potential retirement pot.

That said, the biggest opportunity for most of us will be the final tax deadline of the year – the end of the company trading year for the vast majority of businesses.

So what’s the big opportunity here?We‘re all aware of the significant number of clients who have built up funds and claimed their pensions in the last number of years due to impending changes in legislation. Even still, it’s fair to say that the majority of company directors who have not yet claimed their pension plans are nowhere near funding to the €2.3 million Standard Fund Threshold (assuming their salary and service allow them to fund to this level).

Let’s take a look at a typical client example:John is 45 years old, married and has been running his own business for the past 10 years. He tells you that he’s drawing a salary of around €60,000 p.a. from the company and that, ideally, he would like to stop working and retire at age 65. His company currently makes a yearly contribution of €20,000 p.a. and his current pension plan is valued at €50,000 today with a final projected value, at age 65, of €850,000.

Based on the information he has given you, John’s company could provide him with a fund of approximately €2 million at age 65 (Revenue maximum fund allowed). So, effectively, there is a gap in John’s current funding to the tune of €1.15 million.

So how can John’s company close this gap for him?There are effectively three options open to John:

Option 1:The company could increase the regular contribution amount to €23,000 p.a. and invest a once-off single contribution of €330,000.

Option 2:The company could increase the regular contribution amount to €50,000 p.a. and invest a once-off single contribution of €50,000.

Option 3:The company could increase the regular contribution amount up to €54,000 p.a.

From the company’s tax relief perspective, option one means that John could claim full tax relief on the regular premium, in the year that it is paid, and relief on the single premium contribution spread over the next five years.

Tax relief would be provided in the year that it‘s paid for both options two and three.

How can John fund more than his current €2 million Revenue maximum?The options above provide insight into the funding gap on the Revenue maximum fund of €2 million allowed, based on John’s current salary and service only. If John advises you that his company can afford to contribute more than the amounts above, and would like to close the gap between his current €2 million maximum and the €2.3 million Standard Fund Threshold, what are the steps that John has to take?

John’s first step is to increase the salary he’s drawing from €60,000 to €68,000 p.a.

Based on this new income the associated fund required to produce Revenue maximum benefits would increase to €2.3 million. To target this new higher fund, John would pay an €8,000 additional voluntary contribution to his company pension plan each year. This would mean increasing his overall pension contribution level from €54,000 per annum (option three above) to €62,000 per annum.

What are the key benefits here for John?First of all, John’s retirement pot would be 15% higher at retirement, jumping to €2.3 million from €2 million.

Secondly, John would receive an additional after-tax lump sum of €60,000 (25% of the additional €300k additional fund accumulated, less 20% standard rate tax).

Finally, John wouldn’t have additional income tax liability as the Additional Voluntary Contribution would offset the €8,000 salary increase. John would however pay slightly higher PRSI and USC – around 11% personally, with the company also paying an extra 5.375% employer’s PRSI.

The key thing over the coming weeks is to try to meet as many company directors as possible to show them the funding opportunities that could exist for them. To support you, Irish Life has recently built a Revenue maximum funding calculator that quickly and easily determines the Revenue maximum contribution limits for company pensions, and only requires a small amount of information. The calculator is available on our bline website in the pension supports section and can provide you with the answers to the three options discussed above.

For any further support or information on how these opportunities might work for your clients, please do not hesitate to contact your Irish Life account manager or a member of the Irish Life Brokerage pension team.

The quotes in this article are not based on the financial needs or objectives of any particular person and do not take account of the specific needs or circumstances of any person. All projected values are based on 6% fund growth, 100% investment, base AMC of 1% (consensus) and level contributions.

ILA

895

2 (N

PI 0

8-11

)

Current Age Male Married % of salary

Male Single % of salary

Female Married % of salary

Female Single % of salary

2054

4150

46

2155

4251

47

2257

4353

48

2358

4454

50

2460

4556

51

2562

4657

52

2664

4859

54

2765

4961

56

2868

5163

57

2970

5265

59

3072

5467

61

3174

5669

63

3277

5871

65

3380

6074

68

3483

6377

71

3586

6580

73

3690

6883

76

3794

7187

80

3898

7491

83

39103

7795

87

40108

81100

92

41114

86105

96

42120

90111

102

43127

96118

108

44135

102125

115

45144

108133

122

46154

116143

131

47166

125154

141

48180

136167

153

49196

148182

167

50216

163200

183

51240

181222

204

52270

203250

229

53309

232286

262

54360

271333

306

55432

325400

367

56540

407500

458

57720

542667

611

This is not a customer document and is

intended for Financial Advisers only

Sample Maximum Contribution Rates to

normal retirement age 60

Irish Life Assurance plc is regulated by the Central Bank of Ireland.

Issue 35.indd 24 09/12/2011 5:41 pm

The BROKER

Winter 2011 25

While most company directors have the scope to target a fund of €2.3m (Standard

Fund Threshold), the reality is that most are nowhere near that level.

John is 45, married and has been running his own business for 10 years

He is drawing a salary of €60,000 p.a. and wishes to retire at age 65

He is currently contributing €20,000 p.a. into a directors pension plan which has a current value of €50,000

and a projected value of €850,000 at NRA Based on his salary and service details, his company could provide him with a retirement fund of €2m (Revenue maximum fund

allowed)

* A further 22.5% commission is payable on the Regular Premium top-ups by year 7 assuming contributions continue to be paid.

Option 1 would provide a fund of €1.9m. (6% gross p.a. investment growth assumed).

Options 2 & 3 would provide a fund of €2m (Revenue maximum). (6% gross p.a. investment growth assumed).

All of these top-up options would provide the client with 100% investment allocation and an annual management charge of 1%

(Consensus Fund).

Option New Single Premium ContributionPotential Commission

Now New Regular Premium Contribution Potential Commission Now

1€330,000

New amount €16,500 (5%) €23,000 i.e. €3,000 New top up amount €225

(7.5% *)

2€50,000

New amount €2,500 (5%) €50,000 i.e. €30,000 New top up amount €2,250

(7.5% *)

3Nil

Nil

€54,000 i.e. €34,000 New top up amount €2,550 (7.5% *)

Let’s take a look at a typical client example:

John has the following options in order to provide his Revenue maximum fund:

WITH PENSIONS?

Assumptions: Projected values are based on 6% growth rate with 100% investment and a base FMC of 0.75% (Consensus).

This is not a customer document and is intended for Financial Advisers only.

Current

Age

Male

Married

% of salary

Male

Single

% of salary

Female

Married

% of salary

Female

Single

% of salary

2042

3038

35

2143

3139

36

2244

3240

37

2345

3241

38

2446

3342

39

2547

3443

40

2649

3544

41

2750

3645

42

2851

3747

43

2953

3848

44

3054

3949

45

3156

4051

47

3257

4152

48

3359

4354

50

3461

4456

51

3563

4558

53

3665

4760

55

3768

4962

57

3870

5064

59

3973

5266

61

4076

5469

63

4179

5772

66

4282

5975

69

4386

6278

72

4490

6582

76

4595

6886

79

46100

7291

84

47105

7696

88

48111

80102

93

49118

85108

99

50126

91115

106

51135

97123

113

52146

105133

122

53158

113144

132

54172

124157

144

55189

136173

159

56210

151192

176

57237

170216

198

58270

194247

227

59316

227288

264

60379

272345

317

61473

340432

397

62631

453576

529

This is not a customer document and is

intended for Financial Advisers only

Sample Maximum Contribution Rates to

normal retirement age 65

ILA

895

2 (N

PI 0

8-11

)

Current Age Male Married % of salary

Male Single % of salary

Female Married % of salary

Female Single % of salary

2054

4150

46

2155

4251

47

2257

4353

48

2358

4454

50

2460

4556

51

2562

4657

52

2664

4859

54

2765

4961

56

2868

5163

57

2970

5265

59

3072

5467

61

3174

5669

63

3277

5871

65

3380

6074

68

3483

6377

71

3586

6580

73

3690

6883

76

3794

7187

80

3898

7491

83

39103

7795

87

40108

81100

92

41114

86105

96

42120

90111

102

43127

96118

108

44135

102125

115

45144

108133

122

46154

116143

131

47166

125154

141

48180

136167

153

49196

148182

167

50216

163200

183

51240

181222

204

52270

203250

229

53309

232286

262

54360

271333

306

55432

325400

367

56540

407500

458

57720

542667

611

This is not a customer document and is

intended for Financial Advisers only

Sample Maximum Contribution Rates to

normal retirement age 60

Irish Life Assurance plc is regulated by the Central Bank of Ireland.

Irish Life Assurance plc is regulated by the Central Bank of Ireland.

ILA

8944

(NPI

08-

11)

For John to take full advantage of the €2.3m Standard Fund Threshold, he could increase his salary which would increase his current

Revenue maximum funding limit fro

m €2m up to €2.3m.

How would this work in practice?

If John increases his salary fro

m €60,000 to €68,000, the associated fund required to produce Revenue maximum benefits would also

increase to €2.3m. To target this new higher fund, John pays an €8,000 Additional Voluntary Contrib

ution to his company pension plan

each year – his new overall pension contribution level therefore would increase fro

m €54,000 per annum up to €62,000 per annum

(€54,000 Employer & €8,000 AVC).

For more details on how these opportunities may work

for your clients, please contact your Account Manager.

Benefits to John

� A 15% increase in his retirement fund (€2.3m versus €2m)

� An additional €60,000 after-tax retirement lump sum {Increase in fund €300,000 X 25% Less 20% Standard Rate Tax}

� No additional income tax liability as the AVC contrib

ution would offset his €8,000 salary increase – he would however pay slightly

higher PRSI & USC

Benefits to Broker

� Commission on the €8,000 regular premium top-up (assuming 100% client allocation at 1% annual management charge, this

would equate to €600 in year 1 and €2,400 by year 7)

This information has not been prepared based on the financial needs or objectives of any particular person, and does not take account

of the specific needs or circumstances of any person.

How John can reach the €2.3m Standard Fund Threshold

WITH

PENSIONS?

Issue 35.indd 25 09/12/2011 5:41 pm

The BROKER

26 Issue 35

“Between sixty and eighty per cent of cases submitted to lenders were

declined.”

The BROKER

RACHEL DOYLEMortgage Manager

PIBA

Mortgage Market UpdateThe last few months have seen some significant changes in the mortgage market, with deteriorating lending levels, changes in ECB rates, new compliance obligations and the publication of the Government’s arrears handling strategy.

Not surprising to any of you who are still advising on mortgages, the PIBA Mortgage Survey for the 3rd Quarter of 2011 found that over 55% of the Brokers surveyed said that between sixty and eighty per cent of cases submitted to lenders were declined. This is an increase of over 5% on the previous Quarter and 13% on Quarter One 2011.

It is estimated that just over €2.3billion in mortgage lending will be done in 2011: this is down approximately 95% from peak. These figures truly contradict what we are hearing from all lenders, that they are lending. The IBF/PwC Mortgage Market Profile published on the 16th of November supports Broker feedback that there is very little lending being done. The profile shows that only 3,607 new mortgages to the value of €623 million were issued during the third Quarter of 2011 and that the volume of new lending in Q3 is down 50.3% by volume on 2010.

We are also led to believe that no one wants to buy, yet lenders are turning away between sixty and eighty per cent of applications submitted. The majority of individuals seeking mortgages are not imprudent borrowers but are people with the capacity to repay loans at a time when affordability has improved greatly. It is apparent that some banks are just not interested in lending for mortgages.

As with the PIBA statistics, the IBF/PwC report shows that First-Time Buyers and Mover-Purchasers still dominate the market and they now account for four-fifths of all mortgage credit issued.

Following the last ECB Rate cut on the 3rd of November 2011 the European Central Bank decided again to cut its interest rate by one quarter of a point to 1.00% on the 8th of December.

While of course any decrease to the rate is welcomed the figure was less than what is justified, given economic circumstances. With the uncertainty in the euro and the risk of a deeper recession across Europe a more aggressive cut is warranted, bringing the rate down to 0.5%, similar to that applying in the UK.

It was disappointing however that some lenders did not pass on both rate decreases to struggling home owners who are on variable rates and have been forced to bear the brunt of recent rate increases. 

With the publication of the new consumer protection code comes more requirements for mortgage Brokers. The new stress testing requirements will see some changes in affordability, which will take place from January 2012.

The publication of the Report of the Inter-Departmental Group on Mortgage Arrears in early October outlined the Government’s strategy for dealing with mortgage arrears.

Some of the key recommendations of the report were as follows:

Independent Mortgage Advice ServiceAn Independent Mortgage Advice Service is to be established. MABS as currently structured is not suitable to give support to distressed mortgage holders. The group recommended that advisors be recruited to operate in regional clusters and be linked to the MABS service. The group have suggested that funding for these advisors should be from lenders.

Mortgage to Rent SchemesEstablishment of two mortgage to rent schemes for social housing eligible households (1) Utilising an approved housing body to acquire the property and (2) A long term lease from the banks directly to the Local Authorities.

Lender SolutionsForbearance arrangements are not always appropriate, therefore the group suggested that the industry should look at alternative solutions, including trade-down mortgages, split mortgages and sale by agreement.

Reform Personal Insolvency LegislationThe group has suggested reforming the personal insolvency legislation. It does note, however, that this should not incentivise behaviour to cease paying debt. They have indicated a need to introduce a non-judicial debt settlement process in conjunction with the bankruptcy legislation.

Mortgage Interest Scheme18,700 households are availing of MIS. Approximately 12,000 households have been on MIS for over one year and over 6,000 for over two years. The group recommend that there is a time limit give to the MIS; the introduction of mortgage to rent schemes will be used to provide a better alternative to those in arrears.

None of these issues have come to a conclusion, lending levels are still deteriorating, ECB rates still need to decrease more, the new compliance obligations will be coming into effect in January and the arrears problem needs to be addressed. It will be also interesting to see how the proposed sale of residential properties by NAMA and the new mortgage interest relief will affect the marketplace.

The mortgage market will definitely be one to watch in 2012.

Issue 35.indd 26 09/12/2011 5:41 pm

Winter 2011 27

The BROKER

DONAL MILMO-PENNYMyLife.ie

BailoutWe are playing a dangerous game these days and my bet is that we will eventually lose.

The broad application of ‘bailout’ is an attempt to cheat the fundamentals of the classical economic system. Much as the body will reject the presence of a virus and fight it to the end, our economic system will do likewise with ‘bailout’.

Let me explain: the basis of the classical economic system is not a synthetic construct but is based on a set of rules: irrevocable truths if you like, which cannot be changed or manipulated. These concepts were not created but observed much like the rules of nature or mathematics. Try as you might you will never succeed in making summer precede spring. Much as you will never make 1 + 1 = 3, you will never succeed in changing the fundamentals of the system. Why is this not abundantly clear to the governing classes in Europe and beyond? The great trade off of the classical system is that busts are inevitable. Since Keynes we have been manipulating the system to ease their effect. Social constructs such as the welfare state are an antidote to the system’s inherent brutality, making it practical and humane. This type of insertion works within the rules; it does not demonstrate an ability to change the fundamentals.

So why this bust and why now? Simply, we are paying for the enormous glut of debt that has built up in the system since the explosion in the debt markets dating back to the late 1970’s. The appetite for debt came mainly from the investment banking sector. Debt is in its own right a good thing: it allows those without capital to fund their enterprises, creating wealth and employment. It allows sovereigns to deliver strategically and socially important infrastructure projects for the good of society. Used judicially debt is a powerful tool for good. However, we have not been judicious. Instead of

efficiently allocating capital to reward constructive endeavour and for the good of society, we have created a bloated and highly leveraged financial system that has enriched a narrow constituency. We have allowed an influential financial elite to cosy up to a powerful political elite and quietly deconstruct the rules that protected society at large from the dangers inherent in the system. What has happened is nothing short of constructive sociocide: it’s vile and despicable. Yet quietly the elite are still allowed go about their business whilst the debt is offloaded to society at large, to ordinary low and middle income families. This is being effected in different ways around the world: in Europe we call it austerity. This is clearly wrong but what is more troubling is the possible endgame.

There is a small but growing discontent forming amongst the disproportionately unemployed but still relatively passive and comfortable youth. What if the passivity ceases? What if this goes mainstream? In the absence of prosperity what if conventionality is challenged? The eventual political expression of this wronging of the system may yet prove decisive. History tells us that the ultimate expression of politics is war … one would hope that we are not quite that far gone.

I bet the current concept of ‘bailout’ will fail. I can’t tell where that will lead us but ultimately unless you are one of a very small minority you will lose. If you think I am about to ask you to join the revolution, I am not. The point is that we need to recognise how the system works and set our priorities as a society accordingly. The classical system is without peer: it allows individuals to prosper, it facilitates the talents and ambitions of the best and the brightest, but it can also protect those who are least fortunate. What is happening is wrong; it’s down to individual and collective choice to correct that.

“What has happened is

nothing short of constructive

sociocide”

Issue 35.indd 27 09/12/2011 5:41 pm

The BROKER

28 Issue 35

The BROKER

ANDREW MILLIGAN

Head of Global Strategy

Standard Life Investments

Standard Life Investments House ViewWe remain positive on the ability of companies to generate profits, despite the muted economic backdrop seen in many developed economies, as emerging economies continue to expand strongly. However, the rise in raw material costs is squeezing margins for some companies, while currency appreciation is becoming more of a problem for others.

Central banks in OECD countries are debating the pace and extent of interest rate changes. However, policymakers are becoming much more mindful of the ongoing sovereign debt crisis. This suggests that more central banks will be forced to accept some form of quantitative easing into 2012. Meanwhile, other central banks, especially those in Asia, are still forced to keep policy tight in the face of inflation pressures.

Given the current environment, we continue to favour sustainable income yield from sources such as corporate bonds, commercial real estate and equity income. We do not favour low-yielding assets: this includes cash and many government bonds.

GOVERNMENT BONDSUS Treasuries NEUTRALYields are supported by muted inflation pressures and continued QE purchases, but the deteriorating fiscal outlook and expensive valuations are slowly becoming a concern.European Bonds LIGHTCore European bond markets still benefit from safe haven flows and moderate levels of inflation but investors remain concerned about slow progress in tackling the fiscal pressures in certain eurozone members.UK Gilts NEUTRALAlthough the muted economic recovery and fiscal tightening provide support for the gilts market, valuations have arguably reached expensive levels, while headline inflation risks will be present at least into 2012.Japanese Bonds NEUTRALJapanese government bonds are not experiencing the same levels of volatility as in other markets, although low levels of yield deter many global investors.Global Inflation-Linked Debt NEUTRALWhile valuations in individual countries need to be examined carefully, the asset class benefits from investor worries about future inflation triggered by easy monetary policies

CORPORATE BONDS  Investment Grade Debt HEAVYPositive corporate cashflows should enable a renewed decline in the now extreme yield spreads although the volatility of the underlying government bond markets will periodically affect total returns.High Yield Debt HEAVYThe asset class still benefits from an attractive carry, healthy balance sheets and low levels of default, although concerns about future economic growth have affected valuations.

EQUITIES  US Equities HEAVYGood cost control and continued export demand have supported strong earnings growth, although consumer debt and the housing market overhang limit many domestic stocks.

European Equities NEUTRALValuations have become more supportive compared with other markets, while many exporters are benefiting from strong emerging market demand offsetting the weakness of some domestic economies.

Japanese Equities LIGHTValuations are not supportive on some measures while the success of the Government in helping the economic reconstruction remains limited.

UK Equities HEAVYThe market is underpinned by strong dividend growth and the benefits of sterling’s depreciation, although companies face headwinds from weak consumer spending and European export demand.

Developed Asian Equities LIGHTStrong economic growth is still translating into inflationary pressures, bolstered by food and commodity price shocks, in turn requiring continued monetary tightening.

Emerging Market Equities NEUTRALSelection is increasingly required: while some benefit from strong commodities demand and upgrades to sovereign debt ratings, others face growing inflationary pressures and valuation concerns.

REAL ESTATE  UK HEAVYAlthough occupier demand has shown signs of slowing, yields remain attractive and we continue to expect reasonable returns versus cash on a 3-year holding period.

Real Estate [contd.]European NEUTRALDespite the evidence of slowing occupier demand, key centres should benefit from the constrained future supply. European real estate is at a neutral weighting due to the higher downside risks for debt funding.North American HEAVYWe see the best prospects in under-developed industrial locations in Canada and the cyclical US office markets where future supply is at 30-year lows.Asia Pacific NEUTRALExcessive supply in several key markets, e.g. China, will hold back growth, but offices in Australia, for example, remain supported by a good demand/supply balance.

OTHER ASSETS  Heavy $ Neutral £ and ¥Foreign Exchange Light €The euro and yen remain expensive and a headwind to economic recovery. Sterling’s value will not be crystallised during another bout of QE. The US dollar is cheap and benefits from general risk aversion.Global Commodities NEUTRALStrong demand for commodities, led by consumer trends and infrastructure projects in emerging economies, but higher prices has encouraged new supply, while a stronger dollar encourages negative investment flows.Cash LIGHTCentral banks in only a select few major economies will slowly tighten monetary policy in order to restrain inflation expectations but rates will remain low on a historical basis.

Standard Life Investments House View is as at the 29th of November 2011.

Issue 35.indd 28 09/12/2011 5:41 pm

The BROKER

Winter 2011 29

PIBA Member ProfileName : Tara WylieCompany name : New Star Financial Management LimitedMember Since : 2011

BackgroundMy background has always tended to be in financial services, right from leaving school all those years ago (1988 if you’re interested); and aside from a few forays into working in or managing pubs in Essex, financial services in one form or another have formed a major part of my career. In the late 80’s, it was either working in a bank in London or becoming a nurse that captured my imagination, and the idea of earning decent money and buying my first home were the main drivers in my ultimate decision to head to London. I have had the opportunity of working for large indigenous and international corporate financial services compa-nies such as M&G Investments, Mitsui Taiyo Kobe Bank, Abbey Life, Abbey National (as was) and Mortgages Direct to name but a few.

My View of the Broker industryYou know when you see someone doing a job and think to yourself, “I can do that just as well – maybe even better”? Well, in short, that’s the realisation I came to after working as an employee both in the UK and here in Ireland. This spurred me on to create New Star Financial Man-agement, a dream I had been nurturing for a while. However it wasn’t a case of doing the same – only better – it had to be different and better! New Star’s values can be summed up as “offering clients personal and bespoke advice for all their financial needs, both now and in the future” and our motto is “exceeding your expectations”. We don’t just pay lip service to this – it is something that forms the very foundation that New Star is built upon. The financial services industry (from what I have experienced) is far from perfect. It has double standards, distinguishing between its customers and its Brokers on service and eligibility criteria. It has small print and onerous conditions. It can be manipulated and controlled, leaving those that need its services feeling vulnerable and confused. There were times in the past when I wanted nothing to do with what is perceived to be this greedy, broken industry, feeling some-how that I would be tainted by my association, BUT – I realised there was something I could do that would change that: as we know, not all financial advisors are the same!

key areas to focus onWe’ve heard it all before: “it’s all about people – not policies” but how many in our industry truly take that to heart? I have never felt comfort-able with the idea of ‘selling’, nor do I feel like a ‘sales person’. Following that mantra of Sales, Props and Targets in your business, is, I believe, like the banks putting profit before customers. I believe Brokers need to break away from the old school mould of talking about ‘products and policies’ and focus completely on their clients’ wants and needs: and talk to their EXISTING clients at that! Just like the Government and OECD searching for those elusive annual ‘growth figures’, Brokers year on year strive to take on more new clients, write more policies, exceed last year’s target and move on. The fear in NOT doing that is how do you know if you are going to ‘make your number’ or ‘hit your target’ if you rely on purely advising clients and seeing what business comes of various meetings. The truth of the matter is that it is only by going through this process do you truly find you have clients who listen to and act upon your advice; it is then that you turn an ‘ordinary policyholder’ into a true client; and then a client for life. Use your client bank. Really get to know your existing clients, including those who may be experiencing financial difficulties. Build on all those existing relation-ships and turn the ones that have been left to grow cold into real bona fide clients with whom you can develop your business and develop your relationships going forward.

The Year AheadNew Star may be a relatively new company but it has a depth of knowl-edge and experience within it, born out of years of service within the industry. The financial world is changing at a rate of knots and New Star are happy to change with it. We are already planning ahead for the eventual introduction of fees and a phased reduction in commis-sion. We are also concentrating on specific areas of financial planning we enjoy working in and are looking to offer specialist services to our clients within these areas. In short – we are looking forward to a busy and successful year ahead!

Issue 35.indd 29 09/12/2011 5:41 pm

The BROKER

30 Issue 35

BOOK REVIEW

BLOG REVIEWS

KARL DEETEROperations Manager

Irish Mortgage Borkers

HOW TO PASS EXAMSDominic O’Brien

If you have been reading the book reviews this year you’ll know that life (reading life anyway!) is not all about finance. We’ve looked at philosophy, economics, politics, theoretical finance and predictive forecasts. The scope is still wide open this time around as we look at memory.

How to Pass Exams is a book by eight-time world memory champion Dominic O’Brien (yes, of Irish extraction). He was an underachiever in school but then, at almost 30, he saw a man on the television memorise a deck of cards and was taken by the art of ‘memory’.

Memory used to be a taught process up until the Middle Ages; learning how to categorise things in your mind was the only way a lot of people ever stood a chance of learning. Let us not forget that pre-printing press (invented in 1440 by Gutenberg) there were no books that people could widely access, and famous libraries had actually been burned down for fear of the information they held: the famous Imperial Library in Constantinople was burned down during the 4th Crusade in 1204.

The Internet, smart phones and easy access to information is changing our lives. Yes, you can ‘Google’ anything you want, but fast recall of important facts is an edge you can profit from. Imagine if you no longer had to go and check a fact, or if you

were able to rhyme off taxation limits going back 30 years at the drop of a hat? Much of the ‘useless’ information we hold sticks for reasons unbeknown to us, and learning as you get older can become harder: it doesn’t have to be that way.

Using simple techniques O’Brien demonstrates how you can ‘exercise’ your mind, and then goes on to show examples of how you apply these things to give instant recall to lists, or anything you want really.

As time goes by, and with more regulatory changes, qualifications, news and information to deal with, having a sharper mind that can hold more of what you want to hold on to is surely a good thing. And at worst it makes for a brilliant read! I strongly suggest giving How to Pass Exams a once over and see if it gives you an advantage you always had and didn’t know about!

http://www.google.com/finance

We often fall into reliance upon life companies for nearly all of our financial information. While I am a friend and supporter of life firms everywhere, I am also a believer in having a broad and well founded choice of options for information; and that is why we are looking at Google Finance.

Google Finance keeps track of all of the breaking world financial news; it also has a lot of really excellent tools that are totally free! Have you ever been asked “what is a good dividend paying stock?”, or maybe you want to look for one yourself, and don’t know how to search the market?

There are great Broker tools out there for Broker specific products, but when you get to stocks and bonds there are very few companies that are splashing out on Bloomberg terminals, and that is where the likes of Google Finance can fit in – powerful research for the right price (it’s free).

The ‘stock screener’ is a great tool for this (to the top left of the page on Google Finance). I wanted to find a company with a market cap of at least $1bn, a P/E ratio of 10, a dividend of 5% and that hadn’t changed in the last year; move the bars on the left and right of each choice to narrow it down and presto, there were five companies that roughly fit these criteria.

It takes more than this to vet a stock, but it is a wonderful starting point. From there you can easily click on news about

the stock, and often individual reports are for sale in the ‘pay per click’ space on the page. As many of us move towards being financial planners that are able to look beyond life products the likes of Google Finance will become part of your working day. Bookmark this site, or the slightly more cluttered but excellent Yahoo Finance: they have certainly provided our firm with an edge when winning business from stockbroker wealth managers.

http://ftalphaville.ft.com/blog/

Sometimes as a blog writer I wish I could punch out just one article of the standard you get on FT Alphaville, the markets and finance blog over at the Financial Times. It is full of interesting thoughts, opinion pieces and breaking news; and as with all good sites there is more information on there than any one person could ever handle or take in.

So I do what I think many of us do and skim for stories that catch my eye; thankfully they never disappoint.

You want an outside opinion on the pros or cons of burning bondholders? What about thoughts on the future of the Euro, where markets might head, policy and politics – in particular how they affect people in the market? Look no further.

FT Alphaville is a popular sub-site on Europe’s most influential financial newspaper; you can’t really go wrong.

The BROKER

Reviews BOOKS, BLOGS, WEBSITES

Issue 35.indd 30 09/12/2011 5:41 pm

31 Issue 3531 Issue 35 Winter 2011 31

Legislation and ComplianceMEETINGS

Central Bank presentation – Fitness and ProbityOn the 4th of November PIBA attended a presentation by the Central Bank of Ireland to the industry on the new Fitness and Probity regime.

Central Bank presentation by the Consumer Protection Code Department On the 7th of November a number of delegates from the Central Bank of Ireland presented to a delegation from PIBA in the PIBA offices. The presentation covered the publication of the revised CPC 2012 and the new Minimum Competency Code.

Central Bank of Ireland Seminar — Fitness and Probity and Online QuestionnaireOn the 23rd of  November PIBA attended a seminar held by the Central Bank of Ireland in relation to the Fitness and Probity regime and the new online Questionnaire.

SUBMISSIONS

Pre Budget SubmissionA pre-budget submission on pensions was made by PIBA on the 14th of October 2011. The submission was made in association with Aviva Life and Pensions, Caledonian Life, Canada Life, Friends First, Irish Life, New Ireland, Standard Life and Zurich Life.

Events

PIBA/New Ireland Investment and Pensions SeminarPIBA ran investment and pensions seminars in conjunction with New Ireland in late September/early October. The seminars were accredited with 4 hours CPD for life and pension Brokers. Presenters on the day were from New Ireland, Grant Thornton and Trinity College Dublin.

These seminars took place on: September 27th 2011 in DublinSeptember 30th 2011 in Cork October 4th 2011 in Galway.

These seminars were free for members and over 285 members and their staff attended.

Thank you to New Ireland for supporting these events.

PIBA Service Excellence Awards 2011The Service Survey awards reception took place on Wednesday the 16th of November 2011 in The Four Seasons Hotel, Dublin 4. It was decided to suspend the lending award this year due to the economic climate.

Awards were presented in the categories of Life Assurance and General Insurance. Zurich General won the General category and for the first time since the awards were founded there was a new winner in the Life category – Irish Life.

PIBA Winter CPD Bootcamp 2011PIBA held the annual winter CPD bootcamp sessions in Cork, Athlone and Dublin on November 22nd, November 29th and December 1st respectively. The presentations covered the following areas: Consumer Protection Code 2012, Fitness and Probity Standards, Minimum Competency Code 2011, pensions, investments and protection products. These seminars qualified for 6 hours CPD for Life Brokers and 2 hours CPD for General Insurance Brokers. These events were provided free of charge to members and their staff. Over 300 members attended these seminars. Thank you to Irish Life, Zurich Life, Standard Life and Aviva Life & Pensions for supporting these bootcamps.

Regional CPC Workshops 2012Regional seminars for members on the Consumer Protection Code 2012 have also been scheduled for early 2012 in eleven locations nationwide.

For more information please contact edel.morey@piba.ie.

Media CoverageBelow is a sample of media coverage received over the last quarter.

Radio/TV CoverageSeptember 9th – Rachel Doyle of PIBA was interviewed in relation to the ECB interest rate [NEWSTALK]September 28th – PIBA Mortgage Survey referenced [NEWSTALK] October 3rd –PIBA referenced on TV3 Morning Show in relation to mortgages [TV3]November 10th –Breakfast Business: Diarmuid Kelly interviewed re: commissions, new regulations etc [NEWSTALK]

Press Coverage (Print and Web)September 9th – ‘Early’ mortgage cuts boost for homeowners [IRISH INDEPENDENT]September 9th – Interest rates on hold as Trichet lauds Irish action [IRISH EXAMINER]September 18th – Giving consumers a guiding hand [SUNDAY BUSINESS POST]September 28th – Up to eight of every ten mortgage applicants are refused [IRISH INDEPENDENT]September 29th – 80% of mortgage applications are refused [IRISH EXAMINER]October 7th – Mortgage boost with rate cut on the cards [IRISH EXAMINER]October 7th – ECB rate unchanged [IRISH DAILY MIRROR]October 16th – We show you how to prevent falling into the banks trap [THE SUNDAY TIMES]October 23rd – Mortgage Borrowers prospects [SUNDAY BUSINESS POST]November 3rd – The European Central Bank has cut its main interest rate by a quarter point to 1.25% [RTE WEBSITE]November 4th – Bank EU very much [DAILY MIRROR]November 4th – Minister urged to ensure banks pass on interest rate cut [DAILY MAIL]November 6th– Huge fees charged by Brokers will bleed your investment dry [IRISH INDEPENDENT]November 21st – Rate cut would cost Bank of Ireland €50m [SUNDAY TIMES]

The BROKER

PIBA Update

Winter 2011 31

Issue 35.indd 31 09/12/2011 5:41 pm

32 Issue 3532 Issue 35

Quarterly Crossword Competition

The BROKER

32 Issue 35

HOW TO ENTERSimply complete the crossword puzzle and send your entry along with the form to: Crossword Competition, c/o Salient Print Management, 37 Woodlands, Naas, Co. Kildare.Entries to arrive not later than 31st January 2012.

Name: ..................................................................................................................................................................

Company: ..................................................................................................................................................................

Address: ..................................................................................................................................................................

..................................................................................................................................................................

Phone: ..................................................................................................................................................................

SOLUTION to the Autumn 2011 Crossword

15

T H O M A S J E W E L S

A S Q U IS

T H K E NID O

S T ES T

S B T

R U X

U UW S T O N

S T

SE

S H E E N L I F E

P I L O T OF

P V A

T R C

E I

R

ER C H A R D

E N G I N E L O N D O NS H K P A G

T M R

Y B E S R D

R I A O N I

CONGRATULATIONS to competition winnerRuairí McMahon,DMD Financial Services Ltd.,Crescent House,Hartstonge St.,Limerick.

WIN an overnight stay for Two* at The g Hotel Galway* Three-course Meal and Full Irish Breakfast included

The g Hotel, Galway city’s only five star hotel, is located close to the heart of the city, along the majestic coastline of Galway Bay. Designed by the world renowned milliner Philip Treacy, the g boasts extravagant guestrooms, a luxury spa designed by ESPA, delectable dining options, state of the art conference facilities and a bespoke wedding venue. The restaurant, Matz at the g offers an extensive Irish menu with a European influence. Award

winning ESPA at the g is set amidst a Zen rooftop garden where guests can experience complete rejuvenation. Your prize will include overnight accommodation in a beautiful deluxe bedroom with full Irish breakfast and a delicious three-course meal in Matz at the g restaurant. At the g, thoughtful service meets sophisticated style in a wonderful setting, where each and every guest is made feel welcome from the moment they arrive. It is the special Irish hospitality that makes the g an experience not to be missed and one to cherish.

Tel: +353 (0)91 865200 | Email: info@theg.ie | Web: www.theghotel.ieThe g Hotel, Wellpark, Galway, Ireland

General Knowledge CrosswordACROSS1 Latvia’s capital city (4)8 Host country of rugby union’s 2011 World Cup (3,7)9 ‘Born This Way’ is her 2011 album (4,4)10 Violent, explosive anger (4)12 See 3 Down14 Treeless area between the icecap and the tree line of Arctic areas (6)15 Brandy made from cherries (6)17 Minor earthquake (6) 18 Belacqua, the heroine of Philip Pullman’s ‘His Dark Materials’ trilogy (4) 19 Someone who rebels and becomes an outlaw (8) 21 Eoin Morgan, Sachin Tendulkar and Ricky Ponting (10) 22 Bennett, who recorded a 2011 duet with Amy Winehouse called ‘Body And Soul’ (4)

DOWN 2 Juvenile behaviour (10) 3 And 12 Across. In 2011 he became only the seventh male player in tennis history to reach the semi-finals of all four ‘Grand Slams’ in the same year (4,6) 4 Perspiring (6) 5 Person who has to pay rent to live in a house (6) 6 Italian city whose tourist attractions include the Uffizi Gallery and Santa Maria del Fiore(8) 7 ‘Monty Python’ comedian who wrote the musical ‘Spamalot’ (4) 11 He plays George Smiley in the film version of ‘Tinker, Tailor, Soldier, Spy’ (4,6) 13 Scholarly investigation (8) 16 PJ, the 2011 Mercury Prize winner for her album ‘Let England Shake’ (6) 17 Dry twigs used to kindle fires (6) 18 Security device operated by a key (4) 20 Strong rush of wind (4)

1 2 3 4 5 6 7

8

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13 14

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18 19 20

21

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Issue 35.indd 32 09/12/2011 5:41 pm

Committee MembersJarlath Jordan ChairmanPaul Cullen Vice-ChairmanPeter Breen SecretaryLiam Carberry TreasurerKevin MeehanMaurice HarnettDixie CollinsPhilip BrennanDonal Milmo-Penny

Sub-Committee ChairpersonsLife Paul CullenGeneral Maurice HarnettMortgage Peter BreenLegislation Philip Brennan

Chief Executive: Diarmuid Kelly

Our Broker Centre App provides instant access to your anywhere, anytime.

New Ireland Broker Centre AppTalk to your New Ireland Broker Consultant.

Lithographic Print

WHITE VERSION

New Ireland Assurance Company plc is regulated by the Central Bank of Ireland and is a member of the Bank of Ireland Group.

PIBA Single Page Ad.indd 1 29/11/2011 10:24

...building better business - together

The Broker148 Cashel Business Park, Cashel Road, Crumlin, Dublin 12Tel: (01) 492 2202 Fax: (01) 499 1550Email: info@piba.ie Website: www.piba.ie

Editorial Group John Hogan, Karl Deeter, Edel MoreyEditor Donal Milmo-Penny

Publisher: Salient Print Management, Naas, Co. Kildare. Tel: (045) 866057 & (087) 254 3463Design: Salient Print Management, Naas, Co. Kildare. Tel (045) 866057 & (087) 254 3463

Views expressed by contributors or correspondents are not necessarily those of PIBA or the Publisher and neither PIBA nor the Publisher accepts any responsibility whatsoever for them.

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THE OFFICIAL MAGAZINE OF THE PROFESSIONAL INSURANCE BROKERS ASSOCIATION

INSIDE THIS ISSUE

The BrokerISSUE 35 WINTER 2011

Cutting through the Red Tape 10

Budget 2012 – Pensions Update 14

Budget 2012 – Key Changes 12

REGULARSChairman’s Remarks .......................................................... 1Editorial .................................................................................. 3PIBA CEO ............................................................................... 5PIBA Member Profile: Tara Wylie ........................................................................... 29Book, Blog & Website Reviews ................................... 30Crossword ........................................................................... 32

OTHER ARTICLESSomebody is going to get it Horribly Right ............. 7Efficient Markets – Illuminating but Not True ............................................ 15PIBA and New Ireland Investment and Pensions Seminars (photo spread) ............................ 16PIBA Service Excellence Awards (photo spread) .................................................................... 18A New Approach to Generating Income ............... 19Something for Everyone to Smile About! .............. 21Financial Services Claims ............................................. 22How to Maximise Fund Opportunities for Company Directors .................................................. 24Mortgage Market Update ........................................... 26Bailout .................................................................................. 27Standard Life Investments House View ................. 28

NEWSIndustry Round-up ............................................................. 8PIBA Update ...................................................................... 31

Source: Bloomberg (market capitalisation) and Standard & Poor’s (financial ratings) September 20th 2011. *Returns based on an independent survey September 2011. **Biggest refers to market capitalisation. †Financial rating is for the Zurich Financial Services Group. Zurich Life Assurance plc is regulated by the Central Bank of Ireland.

“A pension that’s ahead of the curve. That’s it. I’m moving to Zurich.”

Over the last ten challenging years, Zurich has been consistently the best performer* in the Irish marketplace. Here’s what we can provide your clients with:

The strength of the biggest company providing pensions and PRSAs in Ireland**.

The security of a world class AA- rating†.

A wide and diversified fund portfolio.

Unrivalled, award-winning customer service.

All things considered, can you think of a single reason why you wouldn’t recommend your clients move to Zurich? For more information, call your Zurich Life Broker Consultant.

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