FSCS Limit on SIPP

gibbo888

Hi
As i understand it the FSCA has a protection limit on my invested funds in my SIpp

If for example i have a 300k sipp invested with Halifax in Vanguard lifestrategy 80.
I am protected for £50k if Halifax or Vanguard go bust.

If i decide to split the pot 3 ways
How do i go about choosing a new "different" provider.

If i choose AJbell for eg is that the same as Halifax so counts as 1 protection.
if so how do i choose which ones are not owned or ran by the same company.

Ta.

lisyloo

I am pretty sure that shares and investment funds do not get protection but are ringfenced from the pension provider, so if your pension provider goes bust they cannot touch the underlying investments.


Are you getting confused with cash deposits?

Brynsam

The FSCS is £50,000 per person, per failed firm in the case of SIPPs - provided the underlying product you are complaining about is a regulated one.

Good, clear explanation of all the types of compensation payable: https://www.fscs.org.uk/what-we-cover/questions-and-answers/qas-about-fscs-protection-for-retirement-savings/

grey_gym_sock

if you want to be very careful about FSCS protection, then there's a case for instead transferring your whole SIPP into an insurance-based pension, which can give you 100% FSCS protection with no limit. it can also be very cheap for a large SIPP. SIPPs give you access to a broader range of investments, but you may not need that.

if you are splitting SIPPs, i would be inclined to use clearly unrelated SIPP providers. AJ Bell are the SIPP administrator for halifax's SIPPs (and for various other SIPPs, i believe), so perhaps a SIPP with AJ Bell themselves wouldn't be sufficiently unrelated. or perhaps the SIPP administrator isn't the key role, and it is sufficiently unrelated. but i'm not sure.

Paul_Herring

lisyloo wrote: »

I am pretty sure that shares and investment funds do not get protection but are ringfenced from the pension provider, so if your pension provider goes bust they cannot touch the underlying investments.

Except, it's turned out recently, when that doesn't actually apply.

https://www.thetimes.co.uk/article/i-thought-my-cash-was-safe-i-feel-betrayed-t3bds3qdg

Investors often assume their money will be safe if their stockbroker runs into financial difficulties — after all, they are simply using the firm to buy into other companies. However, thousands of people have been horrified to discover this is not the case following the collapse of the broker Beaufort Securities. They may lose up to 40% of their money and will have to wait months, possibly years, to see any of it again.

[...]

Like other investment firms, Beaufort declared that its clients’ funds were “ring-fenced” from its own operations. However, clients’ money will be used to help pay the estimated £55m bill of the company’s administrator, PwC. That is more than a 10th of the £500m of client funds held by the failed broker.

https://www.thetimes.co.uk/article/share-centre-boss-richard-stone-calls-for-clients-funds-to-be-ring-fenced-after-beaufort-collapse-qll3cb3hc

The little-known law, passed in 2011, came to light after the recent collapse of the broker Beaufort Securities. Many investors had assumed their assets would be ring-fenced if their broker ran into difficulties, but Beaufort’s clients could lose some of their money to help pay the £55m bill of the administrator, PwC.

Richard Stone, chief executive of The Share Centre, last week told Money that he too had not known about the rule until Beaufort went bust. He has now written to Conservative MP Nicky Morgan, chairwoman of the Commons Treasury committee, demanding insolvency laws be altered.

dunstonh

There are multiple FSCS layers.

For the best protection, use a stakeholder pension or personal pension. These get 100% FSCS protection on internal insured funds.

If you use a SIPP on a non-advised basis, then you get £50k at SIPP provider level. And then its £50k per fund house you use (as long as its UT/OEICs and not ITs or ETFs)

Ring fencing works in different ways. If a SIPP provider fails and the funds are UT/OEICs and were correctly purchased, then they are ringfenced.

If the fund house/investment manager fails, then costs will be paid out of the fund.

Beaufort has given rise for some to be concerned but you need to remember their structure was that they were the fund manager and they used high risk illiquid investments that cannot easily be sold or transferred. Unlike your mainstream UT/OEIC funds where this would not be an issue.

westv

What if you use a SIPP on an advised basis?

RickyB2000

How does one go about identifying an fully insured personal pension and fund? For example, I was looking at Scottish Widow and the only reference to protection I could find was the 50k. So is Scottish Widow group employer scheme with standard fund selection 100% protected or not? What if the fund selection was changed?

dunstonh

westv wrote: »

What if you use a SIPP on an advised basis?

You get a bit more FSCS protection if unregulated assets are used but the advice is found to be unsuitable.

How does one go about identifying an fully insured personal pension and fund?

Most insurance companies.

For example, I was looking at Scottish Widow and the only reference to protection I could find was the 50k.

Which SW contract were you looking at? SW SHP gets 100% FSCS protetion as that only uses internal funds. The SW PPP gets a mixture of 100% FSCS protection or 50k depending on fund used. The Retirement account is the same as the PPP.

westv

If I hold Standard Life Myfolio in a SIPP what is the protection then? It all sounds very confusing but hopefully most of us won't ever have to care.

dunstonh

If I hold Standard Life Myfolio in a SIPP what is the protection then?

£50k from the SIPP provider and £50k for the fund.

SL Myfolio and the SIPP are a world apart from Beaufort.