SIPP vs personal pension and compensation limits

Lois_and_CK

I've currently got a SIPP with HL which contains just the Vanguard LifeStrategy 80% equity accumulation fund. I originally set it up in a SIPP because at that time I couldn't find the Vanguard LS funds in any personal pensions (either that or I missed them when I looked!)


I see that Vanguard LS funds are now available in Aviva Pensions as a 'self-select' option: https://www.direct.aviva.co.uk/myfuture/FundChoice/SelfSelectFundsList


Anyway, I've built up £70k in my SIPP to date, and this has prompted me to look at the FSCS compensation limits for pensions. I think what it's saying is that my SIPP is classed as a 'direct investment' and so the money is protected up to £50k. But if my money was instead in the VG LS fund within the Aviva pension, this would then be a 'personal pension' and therefore classed as a 'life insurance contract' and so 100% of my money is protected, even if my pot reached, say £200k or whatever. Am I understanding this correctly?


From the FSCS website:


The compensation limit which applies to your pension will be dependent on the way your pension has been invested:

• Deposits: if you choose to deposit your pension funds in a bank, building society or credit union you are protected up to £85,000 per person per firm.
• Investments: If you choose to place your pension funds directly in investments (other than insurance products), you are protected up to £50,000 per person per firm. This limit will also apply if your claim involves the mis-selling of a pension.
• Retirement income: If you are already drawing a set retirement income from your pension pot from a life insurance contract, such as an annuity, your income is protected by FSCS to 100% if anything happens to your provider.
• Pension Life Savings: If you are still building up your pension pot, 100% of your pot will be protected if it's directly managed under a life insurance contract. This would include personal pensions and stakeholder pensions, but not defined-benefit workplace pension schemes, which may be instead covered by the Pension Protection Fund.
• Investment Life Policy Savings: These are long-term life insurance policies which have a savings element, such as endowment policies or investment bonds. Any investment life policy savings you hold are protected up to 100% with no upper limit.
• Death or Incapacity: FSCS will pay your claim to 100% if it arises from death or incapacity, if anything happens to your provider.

dunstonh

But if my money was instead in the VG LS fund within the Aviva pension, this would then be a 'personal pension' and therefore classed as a 'life insurance contract' and so 100% of my money is protected, even if my pot reached, say £200k or whatever. Am I understanding this correctly?

No.

Aviva offer insured funds as well as UT/OEICs on their pension. The insured funds have 100% FSCS protection but the UT/OEICs only go to £50k.

There is a bit of conflict on your risk assessment. You are in the higher risk VLS80 but at the same time you are concerned about the minuscule risk of failure on a unit-linked fund.

Lois_and_CK

Ahhh ok, thanks Dunstonh. As always, very helpful.