Moving to a SIPP

Mirador

Apologies if this is a stupid question, but if I move my pension to a SIPP, using say Best Invest, how is my money protected? With banks I know I am okay up to £85k, but what are the protections for my pension funds? Their terms and conditions only mention protection up to £50k? But if my money is in funds, am I right in thinking that it is not held by Best Invest, but by various fund managers?
Thanks

greenglide

Your investment is, indeed, held by trust managers, not the platform.

For banks surely it is only money in "bank accounts" (retail banking) that is covered up to £85,000. Any money invested (stocks and shares ISAs, pensions etc are outside this but the bank doesn't have the money itself any way.

jamesd

FCA regulations require that all client money be held in segregated pots, kept apart from the company's own money. With daily reconciliation so that even the day to day balances leave all client money protected. there have been fines in the millions of Pounds range for firms that got this wrong even when there was no loss by customers.

Because the money is held in trust or similar protective arrangements the main likely need for the £50,000 is fraud or other criminal activity, or a failure to follow the regulations.

Sometimes SIPP or S&S ISA cash could be held in the account of a registered deposit-taker, like a savings account. In these cases the higher £85,000 for deposits would apply to that portion of the money. This doesn't normally apply to the cash in SIPP or S&S ISA accounts, I'm just mentioning it because it is possible and there are some SIPPs that offer high interest deposit accounts. For ISAs the FCA has clarified some rules to specify that the client money rules about segregation apply, and the £50,000 cap that goes with it.

dunroving

Mirador wrote: »

Apologies if this is a stupid question, but if I move my pension to a SIPP, using say Best Invest, how is my money protected? With banks I know I am okay up to £85k, but what are the protections for my pension funds? Their terms and conditions only mention protection up to £50k? But if my money is in funds, am I right in thinking that it is not held by Best Invest, but by various fund managers?
Thanks

:beer: I was thinking exactly the same question earlier today!

Triumph13

One way to think about it is that your bank account is money that you've loaned to the bank. Your pension investments are more like valuables you are keeping in a safe deposit box at the bank.
If the bank goes under then it might not be able to pay you the money that it owes you, but everything in the safe deposit box belongs to you and the bank's creditors have no claim over it. The only risk with the safe deposit box would be if the bank behaved criminally and stole the contents.

Mirador

Thank you everyone for such informative replies, very helpful