Property Fund Questions and Answers
What has caused Canada Life and other providers with property funds to take this action and delay redemptions out of the funds?
We have taken the decision to defer withdrawals from our property funds as a result of the ongoing uncertainty around the pricing of commercial property assets, following the vote to leave the EU, and the recent rise in requests to withdraw (or switch) from property funds.
Selling commercial property can take time and the fund manager must carefully control the process in the best interest of the investors. Deferring requests to withdraw allows us to protect the interests of all investors in the property fund, including those who plan to remain invested for the medium to long term.
Which funds are affected?
- Canlife Property Life Fund
- Canlife Property Pension Fund
- Canlife UK Property Life Fund
- Canlife UK Property Pension Fund
How does this affect my client’s policy?
Your client’s policy will continue to perform in line with the performance of the property fund held. If they request to switch funds or cash in all or part of their policy then we will hold the request in a queue and postpone the request for up to six months, until we have sufficient certainty of the value of property assets and enough cash in the fund to meet the demand for these redemptions.
Will this affect regular withdrawals from my client’s policy?
Any regular withdrawals that are already set up will continue, but new requests for regular withdrawals from the property funds will not be possible until the deferral is lifted.
When will my clients be able to get their money out of the property fund?
In six months’ time or sooner if there is sufficient certainty of value of property assets and cash within the fund to meet requests.
I was never aware this could happen, why are you allowed to do it?
At the time you sold the policy, you should have been in receipt of key features and other policy documents that would have explained these unique risks of investing into a commercial property fund.
Will my client lose their money if they can’t take it out?
They might lose some of the value - the nature of unit-linked investments means that the value of investment can fall as well as rise and you may not get back the full amount you invested.
What unit price will my client get when they can cash their policy in/switch from the property funds?
If your client makes a request to withdraw or encash from one of the property funds we will place the request in a queue, for up to six months. The price received will be that of the units on the day the actual encashment takes place, which could be different to the price on the date of the request.
What affect will delaying withdrawals have on the property funds?
The funds will continue to be actively managed and the deferral will give the fund managers the time they need to carefully control the process of selling properties and to maximise the value achieved.
Will this affect death claims?
Death claims will not be affected by the deferral. In the event of a life assured’s death the claim will be processed as normal.
Will this affect pension maturities?
Pension taken at a selected retirement date will be unaffected by delayed redemptions. In this event the claim will be processed as normal.
What will happen in six months’ time if the situation has not improved or has got worse?
Your client’s request will not be delayed by more than 6 months.
What impact will selling properties have on the value of my clients’ policies?
If the properties are sold at the same price as they are currently valued then there will be no effect on the performance of the fund. However because we may have to sell properties in an uncertain market it is possible that the sale proceeds will be less than the current value of the property. In this situation the unit price of the fund will fall.
Will you inform me when you are in a position to make switches or pay out? If the price is less than that applying at the time my client requested the switch, can they cancel the request?
Any switches or surrenders that are received will be actioned at the end of the deferral period.
If your client does not want to proceed you will have 5 days from when we receive your request to tell us to stop. If we don’t hear from you, your request will be placed in a queue and it will not be possible to cancel this request. We will not be contacting you again before we process your request.
However, if your client wishes to remain invested in the property fund we can arrange for their money to be switched back into the fund on the day we are able to process the request.
Can new investments be made into the fund while there is a six month deferral in place?
Yes, you can switch into the property funds during the deferral period and/or select the property fund for a new or additional investment. However, if your client then wanted to change their investment into another fund or cash in the policy then they could be affected by the deferral period.