Is there any point in spliting pensions between providers

sgx2000

FSCS provide cover for 85k

Would it not be wise to devide pension pot between providers?

What am I missing?

Brie

No 85k cover for pensions as far as I'm aware.  That's just for bank accounts. 

Great to split pension pots if you want different things at different times perhaps.

mebu60

That the underlying investments are ring-fenced. If the pension provider went under you would be reunited with your assets (eventually). Many people have pension pots greater than £85k. FSCS £85k is for savings.

There is the Pension Protection Fund (PPF) if your employer goes out of business and can't pay your promised private pension under their scheme.

dunstonh

FSCS provide cover for 85k

Not strictly true.

Its 100% with no upper limit if you are using insured pension funds.
It is £85k per fund house if you are using UT/OEICs
It is nil if you are using ETFs, ITs or shares or other direct holdings
If its an insured provider, its 100% with no upper limit.
If its a  platform then its £85k for platform issues (but your assets are ringfenced)

What am I missing?

WHat FSCS protection were you referring to?  (as there are different types)
What type of pension do you have?
What type of funds/investments do you use?

artyboy

dunstonh said:

FSCS provide cover for 85k

Not strictly true.

Its 100% with no upper limit if you are using insured pension funds.
It is £85k per fund house if you are using UT/OEICs
It is nil if you are using ETFs, ITs or shares or other direct holdings
If its an insured provider, its 100% with no upper limit.
If its a  platform then its £85k for platform issues (but your assets are ringfenced)

What am I missing?

WHat FSCS protection were you referring to?  (as there are different types)
What type of pension do you have?
What type of funds/investments do you use?

 But doesn't that 100% depend on the financial stability of whoever is doing the insuring? Given that FSCS cover for investments (such as it is) is more geared towards the very unlikely scenario of gross maladministration by large financial services firms, I'm not certain that "100%" really adds a whole lot more security here. 

Tangentially, it's part of the reason I don't have any big issue with accepting that ETFs fall outside the FSCS...

dunstonh

 But doesn't that 100% depend on the financial stability of whoever is doing the insuring? Given that FSCS cover for investments (such as it is) is more geared towards the very unlikely scenario of gross maladministration by large financial services firms, I'm not certain that "100%" really adds a whole lot more security here. 

No.  Insurance gets 100% FSCS protection.  That includes insured pensions (such as stakeholder pensions or personal pensions) and insured funds.

sgx2000

dunstonh said:

FSCS provide cover for 85k

Not strictly true.

Its 100% with no upper limit if you are using insured pension funds.
It is £85k per fund house if you are using UT/OEICs
It is nil if you are using ETFs, ITs or shares or other direct holdings
If its an insured provider, its 100% with no upper limit.
If its a  platform then its £85k for platform issues (but your assets are ringfenced)

What am I missing?

WHat FSCS protection were you referring to?  (as there are different types)
What type of pension do you have?
What type of funds/investments do you use?

Thanks for the reply

I curently have a local gov db pension paying
And a workplace pension with Aviva  (phased)

I am just about to be made redundant..... woohoo .....early retirement 64
The redundancy will cover me for a couple of years until my state pension cuts in...

Gives me a couple of years to decide how to take the current workplace pension ( probably Ufpls)
Probably moved to better fund  maybe a vanguard global fund

But £120k in there so was just considering  risks with the pot.....

hugheskevi

I was quite surprised by this FSCS Press Release last week, which seemed unduly alarmist about the safety of pensions.

Then their 'Check your money's safe' tool for pensions for those who have a pension gives nice green ticks for Defined Benefit pensions, SIPPS, and other personal pensions. But for workplace DC pensions there is a warning exclamation mark with the ominous text "Your defined contribution workplace pension could be set up to be trust-based, contract-based, or group-based. FSCS protection would depend on how your particular scheme was set up. It’s up to you to find out what protection your pension has."

As a layperson, I don't think I would be at all reassured about the safety of pensions if I just read the FSCS material.

tacpot12

The most practical reason for split pensions is to avoid being without money if one the providers has a problem with their IT systems. This is only significant if you are drawing a pension. If you are still paying into a pension there is no reason to split your pension between providers for the reason given above (your investments are always yours).

Albermarle

But £120k in there so was just considering  risks with the pot.....

If you are with a mainstream provider using regulated investments, then the chance of your pot vanishing into thin air is very minimal. Many people keep hundreds of thousands , even Millions , with one provider.

The risk is much more that you pick the wrong investments/the market plummets etc 

sgx2000

Albermarle said:

The risk is much more that you pick the wrong investments/the market plummets etc 

That is very true...
Its almost an educated coin toss... lol