Workplace pension FSCS limit - even provider is confused.

Malthusian

The rules on FSCS cover are absolutely clear, totally transparent, and will never be relevant to 99.99% of pension investors.

We have seen enough big crashes to to never say never.

Crashes have absolutely nothing to do with the FSCS.

I am however interested about "Zagfles " comment that clients money is ringfenced ? Is that really the case for say a Scottish Widows drawdown ?

Yes. The money in your drawdown policy has to be kept separate from Scottish Widows' own money. This is the case with any provider of investment / pension products or funds.

Linton

musicegbdf wrote: »

Have just started to read this thread and sorry to see some remarks that are a little flippant.
It is a serious question from the OP , and one with major consequences for an individual.
I to am concerned at the lack of clarity from the pension industry. There is a great deal of encouragement into drawdown schemes , but little or no warning of the risks. The FSCS told me £85k and Scottish Widows £50k , but both had to go and check.
With many pension pots going into serious amounts that people have spent a lifetime saving for , there really should be greater transparency . I would say a very high proportion of people would answer they really do not understand pensions.
We have seen enough big crashes to to never say never.
I am however interested about "Zagfles " comment that clients money is ringfenced ? Is that really the case for say a Scottish Widows drawdown ? Again trying to cut through the sales blurb , it is hard to find what the saftey nets might eb if any.

The replies arent flippant. The risk that FSCS protection mitigates against is so unlikely if you are using mainstream regulated schemes that it can be ignored as far less likely than other risks you routinely ignore. FSCS protection doesnt cover crashes in share prices. The risk that your investments disappear is covered by ringfencing. The company running the scheme has no access to your investments to cover their debts, ditto for the fund management company. This is totally different to your bank deposits. The banks own the money in your bank accounts, all you own is a promise from the bank to pay it back.

dunstonh

I to am concerned at the lack of clarity from the pension industry. There is a great deal of encouragement into drawdown schemes , but little or no warning of the risks. The FSCS told me £85k and Scottish Widows £50k , but both had to go and check.

It is not £85k as its not a deposit. It could be £50k if you are not in insured funds but it will be 100% with no upper limit if you are in insured internal funds.

Really is not an issue. If you are concerned and not using insured funds then dont go above £50k per fund house and dont use mirror funds. And make sure you take extra care as you walk down the road in case something fall out of an aeroplane and hits you on the head. (similarly extreme case of taking care).

musicegbdf

Malthusian wrote: »

The rules on FSCS cover are absolutely clear, totally transparent, and will never be relevant to 99.99% of pension investors.



Crashes have absolutely nothing to do with the FSCS.



Yes. The money in your drawdown policy has to be kept separate from Scottish Widows' own money. This is the case with any provider of investment / pension products or funds.

Thanks
Shame neither SW or the FSCS did not tell me about the ring fencing
To be clear I suffered from a previous employer

e who raided the pension fund legally and have had to top up for the last twenty years so very sensitive . We are not all financial experts and other than my pension I have never been able to save as running my family took all my reserves . I do think comments about getting run over or falling out of planes is flippant , but maybe I am not so clever as others .
Pensions are a minefield for ordinary people and we have to trust employers and the financial industry which does not have such a good reputation in recent years.
Anyway again thks to those confirming the ringfencing , but again I think it should be made clear that a drawdown is not treated as a pension , but a separate investment.

dunstonh

ut again I think it should be made clear that a drawdown is not treated as a pension , but a separate investment.

it is treated as a pension.

If you used insured funds you get 100% FSCS protection
If you use UT/OEICs you get £50k FSCS protection
If you use ETFs, Shares, ITs you get no FSCS protection

If you hold all of those things in a pension in drawdown then it is still a pension. However, only one of those is using pension funds.

Pensions are a minefield for ordinary people and we have to trust employers and the financial industry which does not have such a good reputation in recent years.

Certain parts of the financial industry have had issues but most of it just ticks along fine. There is no need to be paranoid about everything. Perhaps you should be using a less advanced option is you are struggling with it. You should invest within your understanding and maybe using a simple personal pension that invests in insured funds is the best option for you? Simple options are not bad and advanced options are not better (there are plenty better than SW).