Pension Companies and Safety

benz

I’ve done a search on this website and looked at the individual company’s website, but can’t find much information, so my question is -
With the current financial turmoil in mind, and disregarding individual funds, how safe are pension investments, AVC’s, in the likes of Prudential and L&G? Are these types of investments ring fenced from the individual company's finances?

dunstonh

how safe are pension investments

It depends on where you invest.

AVC’s, in the likes of Prudential and L&G?

They are just the administrators. Its where you invest that matters.

Are these types of investments ring fenced from the individual company's finances?

Dont mix up the insurance company with the investments. If you invest in a fund that drops 80% in value then you have no come back whatsoever. However, the insurance company itself for life and pension investments has 100% FSCS protection on the first £2000 and 90% on the rest with no upper limit.

Unit linked funds are ringfenced but conventional with profits funds are not. Unitised with profits are treated as unit linked.

Thanks to Equitable life, the solvency requirements for insurance companies was much improved. You could argue that (and the increased use of unit linked funds) is why they have a much higher FSCS protection than bank deposits as the chance of failure with actual consumer loss is very low.

The products with the most risk seem to be structured products. If you have a SIPP and have structured products in there then you should be looking at the details closely. If you have a stakeholder or personal pension in unit linked funds then I wouldnt be concerned with the FSCS protection.

slow_saver

Hi, I take on board your points about unit trusts etc, but at this time any financial institution could go "belly up!". MY advice to anyone investing in any fund would be to spread your risk as much as possible,that way if any one given sector implodes (e.g equities) you can still manage your exposure to the market.

benz

Dont mix up the insurance company with the investments

Thanks Dunstonh. That's what I wanted to know