Pension options for a newbie and late starter

dustinthewind

Hi all,

I am in my mid-50s and unfortunately, for one reason or another, I have ended up with rather scant pension provision at such a late stage of my working life. On the brighter side, I was able to make a contribution for £60,000 into a (reputable) SIPP last year through a limited company, and may have similar funds available for pension contributions for the foreseeable future. 

My research lead me to think that a SIPP was the pension vehicle most suited to my circumstances. However, I am also aware that FSCS only protects up to £85,000 invested in my SIPP. As I want to minimise the risk of losing funds above the £85,000 threshold if the SIPP goes bust, I was thinking about putting additional funds into other pension pots. Is this a good idea? And if so, where is the best place? Other SIPPs (am I allowed more than 1?), or somewhere else? To be honest, I am not really familiar with other ways of building a pension pot outside workplace pension schemes.

I hope this all makes sense and look forward to your comments.

Thank you.

Linton

Provided you are invested in mainstream funds on a mainstream SIPP, you wont lose money from the provider going bust.  Your investments are ring-fenced and cannot be used to pay the provider's debts.

The relevence of the £85K  FSCS protection has been discussed many times on this forum and I do not recollect any reasonable examples having been found where it could make a difference.  The worst that could happen is that it could take a while for the customer base to be passed to another SIPP provider - the customer base is a very valuable asset.

Contributors to this forum (myself included) have £n00K held on single platforms.

Marcon

dustinthewind said:

Hi all,

I am in my mid-50s and unfortunately, for one reason or another, I have ended up with rather scant pension provision at such a late stage of my working life. On the brighter side, I was able to make a contribution for £60,000 into a (reputable) SIPP last year through a limited company, and may have similar funds available for pension contributions for the foreseeable future. 

My research lead me to think that a SIPP was the pension vehicle most suited to my circumstances. However, I am also aware that FSCS only protects up to £85,000 invested in my SIPP. As I want to minimise the risk of losing funds above the £85,000 threshold if the SIPP goes bust, I was thinking about putting additional funds into other pension pots. Is this a good idea? And if so, where is the best place? Other SIPPs (am I allowed more than 1?), or somewhere else? To be honest, I am not really familiar with other ways of building a pension pot outside workplace pension schemes.

I hope this all makes sense and look forward to your comments.

Thank you.

This question pops up time and again on this board, so is obviously a regular cause of concern.

If it's a real worry for you, is there a good reason why you think a SIPP is better suited to your circumstances than a (non-SIPP) personal pension? The latter has 100% protection - see https://www.fscs.org.uk/what-we-cover/pensions/

Modern personal pension contracts have masses of investment choices, so what is it about a SIPP that makes it better for you - or possibly you've just not considered the non-SIPP option?

Albermarle

As long as you stick to a mainstream SIPP provider, and only invest in regulated investments ( a normal SIPP would not offer unregulated ones anyway), the risk is perceived to be minimal.
If a SIPP provider was getting in trouble, it seems very likely a competitor would snap them up, and your investments would just be transferred to them. They always seem keen to expand.
If your pot gets significantly larger, it could make sense to split it between two providers. This guards against a big IT issue at one of them and maybe will make you just feel better not to have all your eggs in one basket.