How safe is my pension fund?

EdInvestor

MikeJones wrote: »

And it appears that The Pensions Advisory Service has removed the paragraph about compensation amounts referred to earlier in this thread.

However they are still hedging their bets by listing personal and stakeholder pensions under "investment business", not insurance.

MikeJones_2

EdInvestor wrote: »

However they are still hedging their bets by listing personal and stakeholder pensions under "investment business", not insurance.

Yes, I saw that to, Ed.

Not forgetting the fact that the waters are muddied by the FSA's glossary definitions of what is an investment and what is a pension.

No wonder the public gets confused.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

vivatifosi

MikeJones wrote: »

No wonder the public gets confused.

Its not only the public, I'm a trustee and I'm confused....

even_grumpier_old_man

i have a pension with scottish equitable from former employment. the fund was worth around £20k in april when i asked for a quote for taking out my pension. i've contacted them today and the fund is now down to about £18.5k. i was quoted in april for a lump sum of £18 plus annual pension of £100 and assume that will have gone down. my question is: is my fund protected under the new regs and should i take the money and run now? i'll be 60 in january 2009 and the jobs outlook is bleak at present so any income will help. thanks

dunstonh

A further update on this. I have had a few more emails back and forth and just got one to say the pensions advisory service have updated their webpage to now show personal pensions and stakeholders as insurance contracts.

http://www.pensionsadvisoryservice.org.uk/miscellaneous/security_of_pensions/

However, they have also shown SIPPs in there as well which is not correct as SIPPs are not insured contracts. I have emailed them back on this to point that out.

EdInvestor

The advice about SIPPs is correct. As they say, in most cases with pensions (incl SIPPs) the protection won't apply because the money is held separately from the pension provider. Where the money would be at risk is with WP funds, and look at what they say about that:

With Profit Funds (Unitised or otherwise)
These Funds are only run by insurance companies and we believe that they are at risk should the insurance company go into liquidation. In this case application can be made to the FSCS for compensation. It is also our understanding that the compensation basis will be that which applies to Investments, i.e. 100% of the first £30,000 and 90% of the next £20,000. The maximum amount of compensation will be £48,000.

Long term pension protection does not apply - indeed it seems to apply only to annuities. Instead investment rules capped at 48k are applicable.

The situation on cash in SIPPs re different types of accounts , and especially on cash AVCs, needs sorting IMHO as a matter of priority.

dunstonh

I didnt catch the bit on with profits but that is wrong as well then.

They did admit that it was just their interpretation of it and that the rules dont really specify what the things are. They did also confirm that they have been in contact with a number of insurers and agree that there are differences of opinion on what is and isnt covered with the insurers all saying that insured funds fall under insurance protection.

Confuseddotcom_2

Hi,

I've been reading this thread with interest and am confused on the topic of Sipp pension compensation.

From the posts it seems that there is still some ambiguity from the authorities on this but can anyone please summarise for me the latest position.

For a Sipp invested through an online provider e.g. Alliance Trust, Sippdeal etc what would be the compensation should the provider go bust for asset classes such as:

Cash
ETFs
Shares
Funds
Etc.

I've currently got the option of transferring a company pension pot (>£50k) or taking a refund and am considering a Sipp. I want to try and ensure I'm covered before going ahead with a pension transfer which for tax reasons would seem to be the best option.

Thanks

EdInvestor

Confuseddotcom wrote: »

Cash

Should be up to 50k protected, but confirm with provider

ETFs
Shares
Funds

Not affected as all ringfenced from SIPP provider.
If fund provider goes bankrupt, protected up to 48k per fund provider.(eg Barclays capital for ETFs)
Individual shares are normally held in nominee accounts so not affected.

ianian99

my pension fund is as safe as a box of cash in a hole in the ground could be.