SIPP Safety

Sax

Hello,

I have a few question regarding a pension, how safe would my pension be if I moved it to a Fidelity FundsNetwork SIPP for example.

Lets say I invested equally in three other well known fund companies:
a) M&G
b) Jupiter
c) Schroder

Question1:
If Fidelity went bust would I loose any money?

Question 2:
If M&G went bust I presume I would loose a third of my investments?
Would I be entitled to any compensation via FSCS in this case ?

Thanks in advance.
John

Reaper

Investments are not as clear cut as savings but for most fund based investments you don't have to worry. That's because the money that goes via Fidelity to M&G is then used to buy shares which are generally ring fenced. In other words the investment is independent and can be re-connected to you even if the companies managing it go down the pan.

However that's not true of all types of investment. If in doubt it's best to ask the company involved.

Sax

If you choose to invest in stockmarket funds or other investment vehicles, 100% of the first 50,000 is covered

from the Safe Saving section.

Would this apply to each fund in the SIPP, or each company if I held many funds from the same company, or am I getting completely confused with something else!

Thanks
John

Reaper

Hmm. Perhaps my understanding was wrong as the MSE article says

A Sipp is a completely DIY pension which gives you complete control of your pension pot for better or worse! The protection your cash gets depends on how you decide to use it. But importantly, in general the cash is ringfenced from the Sipp provider, meaning if IT goes bust, your money is safe.
If you choose to invest in stockmarket funds or other investment vehicles, 100% of the first £50,000 is covered.

So it is saying that ring fencing applies only to cash. I had thought the actual underlying OEIC investment companies did the same so only investments linked to the investment company (eg with profits endowments) would be at risk.

I'd better bow out and let somebody else provide the answer.

Linton

Sax wrote: »

Hello,

I have a few question regarding a pension, how safe would my pension be if I moved it to a Fidelity FundsNetwork SIPP for example.

Lets say I invested equally in three other well known fund companies:
a) M&G
b) Jupiter
c) Schroder

Question1:
If Fidelity went bust would I loose any money?

Question 2:
If M&G went bust I presume I would loose a third of my investments?
Would I be entitled to any compensation via FSCS in this case ?

Thanks in advance.
John

If Fidelity went bust your ownership of any funds would be unaffected. Obviously there would be some temporary disruption whilst things were sorted out.

If the fund manager went bust but the fund itself was healthy, the fund, as a valuable asset and business, would be bought out by some other company. This has already happened many times. Well, perhaps not the fund manager actually going bust, but certainly several have run into financial difficulties and transferred their funds elsewhere. I dont believe money in a fund is available to the fund manager for use for other purposes.

If the fund was badly invested and lost all value - that's your risk with no compensation.