Pension protection limits

dunstonh

Thanks. Are others worried about pensions over £85k in a SIPP?   Is that the riskiest.

With SIPPs you need to factor in multiple things.
a) the provider
b) the assets you invest in.
c) how FSCS protection works with platforms.

If you use a well capitalised, profitable provider, then the risk is virtually non-existent.  If you use a loss making provider, as some are, then you will probably be ok for as long as their sugar daddies keep funding them and they have low volumes of illiquid assets.   
The type to avoid are the ones with high volumes of illiquid assets.  

The assets are important as direct holdings, such as shares, ITs and ETFs have no FSCS protection.    OEICs/UTs have £85k per fund house.   However, again, its no big deal if you are in the mainstream as the fund house doesn't own your money.   It would need a fraud big enough to bring the company down for it to be an issue.

And finally, the FSCS can use the £85k to pay for administrators to find a buyer. If there are little or no illiquid assets, that will be easy.  If there are high volumes of illiquid assets, buyers will be harder to find.

I said finally in respect of the FSCS, but you also need to consider the FCA.   A firm will look to find a buyer either directly or with FCA support before it gets to the failure stage.

edit added:   This is specifically about SIPPs.    Sometimes, people incorrectly refer to other types of pensions as SIPPs. e.g. personal pensions, stakeholder pensions or auto-enrolment schemes.   FSCS protection differs on those.

Marcon

Pension protection does seem to be a constant theme/worry for people, which is understandable given the high levels of mis-reporting and ill-informed rumour, and low levels of accurate knowledge.

Maybe time to have a 'sticky' on this to save keep answering the same questions time and again? @MallyGirl, is that one for you to take forward for consideration, please? I'm sure several people here would be happy to help write it, especially the IFAs who post regularly and seem to have a particularly good grasp of SIPP protections (the type of pension which crops up the most in this context).