How safe is my company CIS Stakeholder Pension?

Savvy_Sue

I'm in the fortunate position of having some cash with which I could make a sizable AVC, which my pension fund could definitely do with, but I had a worrying thought.

I know if my money's in a bank, then it's protected, but what about my pension? I know the Coop's having an 'interesting' time, and I know that they're not offering company stakeholder schemes any more, and I know that they're not supporting auto-enrolment so we'll have to pick a new scheme from somewhere for new starters, so ... what to do?

Any help much appreciated ...

jamesd

Money paid into personal pensions including defined contribution workplace stakeholder pensions is normally held in trust for each individual employee, so it does not matter whether their employer goes bust or not, their pension pot won't be affected.

Have you compared pension to S&S ISA investing and determined that the pension route is better for you?

zygurat789

jamesd wrote: »

Money paid into personal pensions including defined contribution workplace stakeholder pensions is normally held in trust for each individual employee, so it does not matter whether their employer goes bust or not, their pension pot won't be affected.

Have you compared pension to S&S ISA investing and determined that the pension route is better for you?

I don't think there is a problem with the employer it's the pension company CIS which is causing the consternation.
Money in a bank is guaranteed up to £85,000, isn't it?
I believe there is a guarantee on pension funds, but what is it?

jamesd

Very little reason to worry about pension pot money. It's some of the best protected money there is.

Makes no difference whether it's a CIS workplace pension for a CIS employee or a CIS workplace pension provided to employees of another business. Still gets the usual in trust protections.

The money is with the company that operates the investment funds, not with CIS. Unless it happens to be a CIS run fund. So in general it makes no difference even if the pension provider goes bust because the money isn't mostly with them.

If there is a problem that can't handle, there are two possible limits. For insured pension funds there is protection for an unlimited amount of money. These are the types often used by mainstream pension providers. For others the limit is the usual FSCS investment limit of £50,000 per investment company being used. But as a practical matter, the money would be held in trust or in client accounts so even if the investment company went bust the money wouldn't be lost. For there to be a loss there would have to be some major error or fraud at the investment house. Or of course normal investment ups and downs, which aren't covered by the FSCS.

Money held in a client cash account at the pension provider, perhaps because it's awaiting investment, would get the deposit protection, depending on which specific bank had the money. Some pension companies spread cash over several different banks to raise the effective protection limit way above just £85,000. Four times that if they use four different banks, though this would be pooled with any other money a customer happened to have at the same banks.

Sometimes errors mean that some client money doesn't end up in accounts designated as client accounts, so split apart from the pension company money. The FCA takes this very seriously when they discover it and imposed serious penalties on pension providers that get this handling wrong. This would have been covered by one of the FSCS limits, I'm not sure which one. Some examples of penalties are £10 million fine to Blackrock for failing to put all money in trust accounts and a £494,900 fine to Towry Investment management for not properly responding to a request for information about client money.

wallpaperman

A couple of months ago it was announced that Co-Op pensions/investments/asset management was being sold to Royal London Group who are the biggest mutual insurer in the country.

The own Scottish Life, Bright Grey, Scottish Provident amongst others.

About as strong a company as you can get in this market, I would suggest.

http://www.co-operativebank.co.uk/customerservices/announcements/recentannouncements/royal-london-announces-signing

Savvy_Sue

Thanks all.

jamesd wrote: »

Money paid into personal pensions including defined contribution workplace stakeholder pensions is normally held in trust for each individual employee, so it does not matter whether their employer goes bust or not, their pension pot won't be affected.

As others surmised, I don't work for CIS, my employer has organised our workplace stakeholder pensions through them.

jamesd wrote: »

Have you compared pension to S&S ISA investing and determined that the pension route is better for you?

We need to investigate this, and we'll be taking advice.

zygurat789 wrote: »

I believe there is a guarantee on pension funds, but what is it?

My question exactly!

Savvy_Sue

jamesd wrote: »

Very little reason to worry about pension pot money. It's some of the best protected money there is.

Thank you, that's what I wanted to hear! I just remember the Murdoch pension scandal - in fact my Dad had one pension of £8 pa which he always referred to as his 'Murdoch pension', so I think he'd been hit by it. Fortunately he had a better pension as well!

wallpaperman wrote: »

A couple of months ago it was announced that Co-Op pensions/investments/asset management was being sold to Royal London Group who are the biggest mutual insurer in the country.

The own Scottish Life, Bright Grey, Scottish Provident amongst others.

About as strong a company as you can get in this market, I would suggest.

http://www.co-operativebank.co.uk/customerservices/announcements/recentannouncements/royal-london-announces-signing

Thank you, I had missed that, and they haven't told individual pension schemes yet.

RichandJ

Savvy_Sue wrote: »

Thank you, that's what I wanted to hear! I just remember the Murdoch pension scandal - in fact my Dad had one pension of £8 pa which he always referred to as his 'Murdoch pension', so I think he'd been hit by it. Fortunately he had a better pension as well!

Thank you, I had missed that, and they haven't told individual pension schemes yet.

Er, shome mishtake shurely ?

Did you mean that well known friend of the workers, the bouncing Czech, aka Robert Maxwell ?

Savvy_Sue

RichandJ wrote: »

Er, shome mishtake shurely ?

Did you mean that well known friend of the workers, the bouncing Czech, aka Robert Maxwell ?

Whoops! probably ...

zygurat789

zygurat789 wrote: »

I don't think there is a problem with the employer it's the pension company CIS which is causing the consternation.
Money in a bank is guaranteed up to £85,000, isn't it?
I believe there is a guarantee on pension funds, but what is it?

My question exactly!

Yes I knew that and I saw that James hadn't quite answered the right question but he would know the answer to your query.

result

xylophone

http://www.pensionsadvisoryservice.org.uk/security-of-pensions