FSCS and SIPPs, too risky?

Susy909

1.If my hargreaves SIPP invests in an insurance company fund for example Prudential 20-55 Dynamic, and Prudential went bust, would I be completely covered?

2. If invested directly with prudential, what is the maximum FSCS cover per fund?


I can't find these answers anywhere, the fscs website isn't detailed enough

dunstonh

1.If my hargreaves SIPP invests in an insurance company fund for example Prudential 20-55 Dynamic, and Prudential went bust, would I be completely covered?

HL do not offer insured funds on their SIPP (same with most SIPPs). A fund with what you think is an insurance company name is not an insurance company and is not insured funds with SIPPs. Think of them as a fund house just as you would any other fund house.

2. If invested directly with prudential, what is the maximum FSCS cover per fund?

100% with no upper limit. This is because the fund woulld be held within an insured contract using insured funds. It would not be using the unit trust/oeic version.

zagfles

If Prudential went bust, their creditors would have no claim on your assets if in UT/OEIC's. Client assets are ringfenced, it's not like banks where your deposits are lent out and if the bank goes bust you're just in a line of creditors.

I'm not sure about With Profits type funds, they might be different.

Susy909

Thanks, the FSCS website does not give enough info

Malthusian

That's because the FSCS website is aimed at people who have lost money due to default of a regulated firm, and in the scenario you describe, you would have lost nothing.

All the shares and investments you held via the Prudential fund would still exist, and the most likely outcome is that another insurer would take over the running of the fund from the liquidator.

Susy909

This is the most confusing thing I have ever done.

I am now looking at the Aviva personal pension, but it offers 120 funds, not all from aviva, if aviva went bust, FSCS cover up to 100% because its from an insurance provider, is this right?

dunstonh

I am now looking at the Aviva personal pension, but it offers 120 funds, not all from aviva, if aviva went bust, FSCS cover up to 100% because its from an insurance provider, is this right?

Depends on the Aviva contract. If you have an Aviva SIPP and the funds are not prefixed with Aviva (or have a series number at the end) then these are probably unit trust/OEICs and do not get 100% FSCS protection.

If its the Aviva personal pension (or one of their earlier versions) then all the funds should have an Aviva prefix. Even if the master fund is one issued by another fund house. e.g. Aviva Invesco Perpetual Distribution S6 is an insured fund. Whereas Invesco Perpetual Distribution (share class Z) is a UT/OEIC and gets 50k protection.

Susy909

"The Aviva Invesco Perpetual Distribution S6", in the factsheet says it is an external fund. Apparently these are only covered to 50k.

Also, the Aviva multi asset is classed as an external fund in the factsheet, as handled by some kind of AViva investment company, not the insurance company.

dunstonh

"The Aviva Invesco Perpetual Distribution S6", in the factsheet says it is an external fund. Apparently these are only covered to 50k.

It is an external fund. However, it is an insured fund and has 100% FSCS protection

Also, the Aviva multi asset is classed as an external fund in the factsheet, as handled by some kind of AViva investment company, not the insurance company.

That fund is available in pension fund form and unit trust/OEIC form. So, depending on which one you use, it will either be 100% FSCS protection or 50k.

As I mentioned higher up, Aviva are not just an insurer. They also have an investment company, and a number of non-insurance companies.

Susy909

Page 10 says external funds are not covered at all

https://www.aviva.co.uk/adviser/product-literature/files/in/in13091c.pdf

Example of "Aviva" fund the factsheet says it is external
http://www.fundslibrary.co.uk/FundsLibrary.DataRetrieval/Documents.aspx?type=packet_lp_fund_unit_doc_factsheet&docid=3d3e8309-24f8-4bb7-b332-b0fbd97482e9&user=flweb&language=en-GB&track1=ab667189-7cfd-4822-9194-43973daac467&track2=AvivaForAdvisersUnsecure

Susy909

https://www.aviva.co.uk/adviser/product-literature/files/gn/gn20431.pdf

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