Are SIPP Pensions covered by the government's £50,000 guarantee?

JammieDodger

I can't find this covered elsewhere, but is the government's policy of covering the first £50,000 of savings for SIPP pensions?

My Dad has around £90,000 in Newcastle Building Society and he's worried it will be at risk in the future.

Jammie

MikeJones_2

Hi JammieDodger,

As dunstonh (a regular contributor to this forum), succinctly puts it, a Self Invested Personal Pensions (SIPP) is merely a container which holds monies for retirement planning.

There has been some confusion and much debate about compensation levels in respect of SIPPS since the credit crunch really focused people's attention on the possibility of a bank/insurance company failure.

Personally, I think it depends on WHAT is held in the SIPP and WHERE it is held.

According to an article on Telegraph.co.uk:

SIPPS
With Sipps, as they are known, investors manage their own pension fund. These are not considered insurance contracts, and are therefore protected under the separate arrangements which apply to investments.

This guarantees the first £30,000 in full, then 90 per cent of the next £20,000, adding up to a maximum protected of just £48,000.

This is much less than many people will have in their Sipp, and there are no plans to increase this limit. However, it is extremely unlikely such a situation would arise, unless a company was acting illegally.

This article in Money Marketing dicusses cash held in Icelandic banks within SIPPS, for example.

You might also read this Important Announcement on the Financial Services Compensation Scheme website which mentions the Newcastle Building Society.

I'm not saying that these articles are definitive though. As I said, I think it depends on WHAT is held in the SIPP and WHERE it is held.

Hope this helps.

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.

EdInvestor

Money held onshore in the SIPP bank account provided by a UK bank should be covered up to 50k by the bank guarantee.

So Dad might need to redeploy some of his money if he wants it fully protected.Directly held Govt gilts are 100% protected, 100% safe if held to maturity and can be held in a SIPP. They yield an income like cash.