Annuity Provider goes Bankrupt?

Steve_666_

has an  annuity provider ever gone bankrupt and what did the FSCS provide?

DullGreyGuy

No annuity provider has  gone bankrupt in the UK (at least not in the last 40 years)

https://www.fscs.org.uk/what-we-cover/insurance/

Since 2015 annuities have been covered 100%, prior to that it was 90%

The only real concern is that the FSCS is silent on the topic of indexation 

zagfles

DullGreyGuy said:

No annuity provider has  gone bankrupt in the UK (at least not in the last 40 years)

https://www.fscs.org.uk/what-we-cover/insurance/

Since 2015 annuities have been covered 100%, prior to that it was 90%

The only real concern is that the FSCS is silent on the topic of indexation 

Why is that a concern? Quite the opposite IMO. They state an annuity is 100% covered as long as it's classed as a "contract of long term insurance". That contract will specify what is paid, whether it's flat or inflation linked, whether it has a guarantee period, has spouse protection etc. It's the contract that is "100% covered", they don't say they'll cover selected bits of it (unlike the PPF for instance who are specific about how they index pensions, generally worse than most schemes).

DullGreyGuy

zagfles said:

DullGreyGuy said:

No annuity provider has  gone bankrupt in the UK (at least not in the last 40 years)

https://www.fscs.org.uk/what-we-cover/insurance/

Since 2015 annuities have been covered 100%, prior to that it was 90%

The only real concern is that the FSCS is silent on the topic of indexation 

Why is that a concern? Quite the opposite IMO. They state an annuity is 100% covered as long as it's classed as a "contract of long term insurance". That contract will specify what is paid, whether it's flat or inflation linked, whether it has a guarantee period, has spouse protection etc. It's the contract that is "100% covered", they don't say they'll cover selected bits of it (unlike the PPF for instance who are specific about how they index pensions, generally worse than most schemes).

Last time I contacted them on behalf of an insurance company in relation to a Part VII transfer they stated that they couldnt confirm that indexation would continue to apply. That however was probably 6 years ago now and potentially their position has changed since then

dunstonh

DullGreyGuy said:

zagfles said:

DullGreyGuy said:

No annuity provider has  gone bankrupt in the UK (at least not in the last 40 years)

https://www.fscs.org.uk/what-we-cover/insurance/

Since 2015 annuities have been covered 100%, prior to that it was 90%

The only real concern is that the FSCS is silent on the topic of indexation 

Why is that a concern? Quite the opposite IMO. They state an annuity is 100% covered as long as it's classed as a "contract of long term insurance". That contract will specify what is paid, whether it's flat or inflation linked, whether it has a guarantee period, has spouse protection etc. It's the contract that is "100% covered", they don't say they'll cover selected bits of it (unlike the PPF for instance who are specific about how they index pensions, generally worse than most schemes).

Last time I contacted them on behalf of an insurance company in relation to a Part VII transfer they stated that they couldnt confirm that indexation would continue to apply. That however was probably 6 years ago now and potentially their position has changed since then

That is not an uncommon response from the FSCS.  In areas that have never been tested, getting an accurate answer is next to impossible.    For example, structured products had never failed and originally, it was thought that they were FSCS covered.  It was only when the market counterparty failed that it was decided that FSCS protection would not apply.

Other areas of weakness are insured pension funds.   Some providers say they get £85k FSCS protection. Some say they get 100% FSCS protection.  Others say that only the internal funds get 100% FSCS protection but the external funds get £85k.   The FSCS will not confirm which it is.