private pension safety

zoggie47

This is my first post and I am a novice at all this.
I watched Martin Lewis pension program on TV and was wondering why no one has mentioned anything about the guarantee of a private pension.
I don't mean a work place pension or the state pension.
Is it correct that private pension are only guaranteed up to £85000 and not even all of them?
If so why would anyone built up a private pension pot of more the that?
I am asking as I have been paying into a private pension for 30 years and in that time the provider has changed many times.
It started with Allied Dunbar in my 20's to Zurich which sold to Openwork with uses Sterling on a platform called Embark, they are selling out to Lloyd's Bank or already have done so. The charges are astronomical and I have no faith and trust in the adviser team whatsoever anymore as they are just money greedy with no conscience. 

Marcon

zoggie47 said:

This is my first post and I am a novice at all this.
I watched Martin Lewis pension program on TV and was wondering why no one has mentioned anything about the guarantee of a private pension.
I don't mean a work place pension or the state pension.
Is it correct that private pension are only guaranteed up to £85000 and not even all of them?
If so why would anyone built up a private pension pot of more the that?
I am asking as I have been paying into a private pension for 30 years and in that time the provider has changed many times.

See https://www.fscs.org.uk/what-we-cover/pensions/ and use the very helpful tool they provide to show you exactly what is covered.

zoggie47 said:

The charges are astronomical and I have no faith and trust in the adviser team whatsoever anymore as they are just money greedy with no conscience. 

Then why are you still with them? What's stopping you from transferring?

zoggie47

The costs and no knowledge of where and how to transfer to another company/ provider.
Unless a 3% charge is normal for any amounts paid into the pension.

Prism

On the 85k.
pensions are typically invested in funds, which themselves are invested in shares and/or bonds. If the pension company or platform fails then the funds are safe. If the company running the funds fails then the shares and bonds are safe. Generally you don't need and don't get the £85k protection as that is mainly for cash

Thrugelmir

zoggie47 said:

 have no faith and trust in the adviser team whatsoever anymore as they are just money greedy with no conscience. 

Whatever you think of them. They are highly regulated. In the same way the whole of the UK Financial Servces industry is. Easy enough to change provider to an organisation that you feel more comfortable with. 

dunstonh

I watched Martin Lewis pension program on TV and was wondering why no one has mentioned anything about the guarantee of a private pension.

The term private pension doesn't really indicate a type of pension.  Its a phrase used by some to refer to any pension that is not state pension. Whilst others use it to refer to any pension that is not state or occupational.

No-one mentions anything about FSCS protection on pensions as its largely irrelevant and also very complicated.

Is it correct that private pension are only guaranteed up to £85000 and not even all of them?

No.

It started with Allied Dunbar in my 20's to Zurich which sold to Openwork with uses Sterling on a platform called Embark, they are selling out to Lloyd's Bank or already have done so. The charges are astronomical and I have no faith and trust in the adviser team whatsoever anymore as they are just money greedy with no conscience. 

That trail doesn't follow.  Allied Dunbar plans were rebranded as Zurich.  Openwork was the new name for the old Allied Dunbar salesforce.   Sterling was the original platform name before it became Zurich and then Embark.     Ex Allied Dunbar plans never moved to the platforms unless transferred by an Openwork sales rep.

The general rule of thumb is not to use an FA or salesrep (as you did) but either use an IFA or DIY.     The Embark platform is not expensive and it is whole of market for investment choice.    So, if you are not happy with the investments, then you can select from the whole of market without changing the provider.

The costs and no knowledge of where and how to transfer to another company/ provider.
Unless a 3% charge is normal for any amounts paid into the pension.

It is rare to see any exit charges on platform based pensions.  Are you sure of that figure?


And going back to your initial point, the Allied Dunbar pension had 100% FSCS protection with no upper limit.  The pension you have now has an £85k protection at platform level and £85k per fund house at fund level.   But as mentioned, that is largely irrelevant. 

gm0

zoggie47  There is a lot of complexity around pensions and their protection.  From the Pension Protection Fund for underfunded Defined Benefit/Final Salary for failed sponsoring firms so that people get 90% not scraps.  And the DC protection which for many occupational trusts is 100% via the use of insured funds.  Only in SIPPs and similar is it 85k from the FSCS

As others have said the holding and custody arrangements for funds and shares should protect you from the failure of the SIPP operator if that occurs.  So the 85k shouldn't matter anyway.

And yet - a lot of these situations with the old life companies and the SIPPs are not fully tested in anger in law for a major failure.  So the position is "known" but when a very big bill turns up unexpectedly - lawsuits (and associated delays and costs) are not an unsurprising outcome which can delay matters for the consumer.  Equitable Life being the classic historical example.

Some people take the view that the protection levels are fine and this is a non-issue.  Others prefer not to have all their pension eggs in a single basket even though this inevitably will cost more money to run multiple arrangements

zoggie47

Thank you for all your quick replies.
The 3% is being charged every time I put in a lump sum of cash into my pension. This is on top of an annual 1% charge of the entire value.  As I am self employed and only rely know what I have left is after my accountant done the end of year. I then transfer a larger sum as I have been told that the government adds 20% on top and Martin also says max it out and put in as much as you can. Are you not worried with 1 pot worth 500K or more all with one company?
The reason I don't trust my FA is when I was very ill and needed a big surgery with little chance of surviving (I did) they suggested to me to cash out my critical illness with death policy ( also with Zurich) and put it all into my pension. This advise sounds to me like my FA need another 3% commission badly and not at all in the interest of me and my family.

dunstonh

The 3% is being charged every time I put in a lump sum of cash into my pension. 

That is not the provider/platform charge.   That will be the initial fee going to the sales rep.

 As I am self employed and only rely know what I have left is after my accountant done the end of year. I then transfer a larger sum as I have been told that the government adds 20% on top and Martin also says max it out and put in as much as you can. 

The Government do not add 20% on top.  It is tax relief. Not a bonus.   Relief reduces your personal contribution to the pension by 20%.

Are you not worried with 1 pot worth 500K or more all with one company?

Not in the slightest.  However, there are providers/platforms that I wouldn't go near because of their low financial strength or lack of profitability.

The reason I don't trust my FA is when I was very ill and needed a big surgery with little chance of surviving (I did) they suggested to me to cash out my critical illness with death policy ( also with Zurich) and put it all into my pension. This advise sounds to me like my FA need another 3% commission badly and not at all in the interest of me and my family.

Commission has been banned since the end of 2012.  It is has been fee-based since.   
Why are you using a sales rep FA and not an IFA?   

Albermarle

zoggie47 said:

The costs and no knowledge of where and how to transfer to another company/ provider.
Unless a 3% charge is normal for any amounts paid into the pension.

The process is not so complicated .

There are lots of pension you can open on the internet in a matter of minutes.
After doing that you request the new provider to transfer the old pension to them .
Then when the money arrives , you need to pick what to invest in .

There will be no charges for new contributions ( no 3%) and the annual charge will probably be less than 1 %.

Thrugelmir

gm0 said:

  Equitable Life being the classic historical example.

The issues themselves date back to the early 80's. A very different era.