How protected is a fundsnetwork pension?!

Jaguar_Skills

Hi.

I have a fundsnetwork pension provided through Cavendish/Fidelity.

I’m 33 and currently have about £110k in there. I’ve read a lot of information about the fact that pensions are covered up to £85k?

Now I’m slightly concerned as if I contribute as I have been for the next 20 or so years I will have near enough £1million.

Do I get any protection at all over the £85k?!

ewaste

I think you've maybe misunderstood or need to do some more reading, mind you so do I.

The £85k protection only really applies fully to cash in a pension. The investments in a pension are not covered e.g. at the end of the day it's shares in hopefully thousands of companies around the globe, if those companies go bust (vanishingly small chance of that) you get nothing, the FSCS won't help you here. Investment risk is still investment risk.

If your platform goes bust e.g. Cavendish your money isn't with them it's invested in the underlying funds or shares you've bought, your money is held separately from the platform / company you have the pension with. If you lose money because of fraud on the part of the platform or the underlying fund you invested in, the FSCS can help here as far as I understand it.

So really at the end of the day you don't have any protection either way when it comes to investment, you invest and take the risk in exchange for the reward. This is why having a well diversified investment portfolio is the only way to do it.

Someone will be along to explain how it works far better that I understand them, which is basically cash is protected and fraud on the part of the platforms or fund managers is as well to a certain degree.

Marcon

ewaste wrote: »

Someone will be along to explain how it works far better that I understand them, which is basically cash is protected and fraud on the part of the platforms or fund managers is as well to a certain degree.

100%. See https://www.pensionwise.gov.uk/en/protection

bowlhead99

Marcon wrote: »

ewaste wrote: »

Someone will be along to explain how it works far better that I understand them, which is basically cash is protected and fraud on the part of the platforms or fund managers is as well to a certain degree.

100%. See https://www.pensionwise.gov.uk/en/protection

From the link, yes: up to 100%, but it depends on the type of pension. IIRC an insurance company personal pension could be 100%, but cash or an OEIC held on a funds platform are only £85k each (the cash held with a failed bank, failure of the OEIC due to fraud/negligence, failure of the platform due to fraud/negligence).

Someone will be along to correct that if I'm wrong.

Jaguar_Skills

Thanks all.

I have my investments split between two funds, Vanguard Life strategy 80 and Blackrock consenus 100.

From what most of you have said I should be protected in most circumstances.

I understand that the value of my investments could go down, it was more if Cavendish/Fidelity went bust I don't want to risk losing what potentially could be a lot of money!

JoeCrystal

It is an interesting question! I know that if the insurance company goes bust, the annuities are protected at 90% I think. What happened if the pension funds that are in drawdown I wonder?

Marcon

JoeCrystal wrote: »

It is an interesting question! I know that if the insurance company goes bust, the annuities are protected at 90% I think. What happened if the pension funds that are in drawdown I wonder?

Have a look at the link given above - protection is up to 100% for annuities. Perhaps you are thinking of the PPF 90% protection for deferred members of DB schemes?

As to drawdown - the funds still invested are treated as just that: still invested, and covered as any other funds would be.

Albermarle

You also have to think that the chance of Fidelity, Vanguard etc going bust is extremely small and probably if the global economy was in such a state that companies like this went bust, then by that time you would probably behind a barricade protecting your last can of beans from a starving mob.
They are not banks , who lend money and sometimes do not get paid back and go bust .
In theory an OEIC could lose so much money it could become unviable to operate but by then you have lost most of the money anyway.
However if I had a Million Pounds in pension funds, I would probably want to split it up between 3 or 4 providers, just in case . Risk of IT/virus attack issues is one reason.

Linton

With the banks the money in your account is actually lent by you to the bank. All you have legally is a promise by the bank to pay you back on request as you are a creditor. So if a bank goes bust without FSCS protection you would lose your money.


With standard investments in a regulated environment the situation is very different. Your investments continue to be owned by you, the fund manager and platform only have the right to manage your investments. If either goes bust your money cant be used to pay the company's debts.

dunstonh

I’m 33 and currently have about £110k in there. I’ve read a lot of information about the fact that pensions are covered up to £85k?

Not quite correct. It depends on the pension.

Personal pensions and stakeholder pensions use insured funds and have 100% protection with no upper limit.

SIPPs are classed under the investment category and get £85k on the SIPP. However, the investments you use may have no FSCS protection. If they do, it is usually £85k per fund house or 100% with no upper limit if you use insured funds (not common on the DIY side).

It is an interesting question! I know that if the insurance company goes bust, the annuities are protected at 90% I think. What happened if the pension funds that are in drawdown I wonder?

Annuities changed to 100%.

Drawdown is not recogised as being any different to the accumulation stage. So, if you are using insured funds, you get 100%. If you use a SIPP you get £85k. If you use direct investments in the SIPP, you get zero (although the SIPP provider limit still applies to them).