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How safe is my pension fund?

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fact_hunt
fact_hunt Posts: 6 Forumite
in Pensions, annuities & retirement planning
Hello, I have the opportunity to join a group personal pension plan (GPP??) with my new employer. The charges are low, or so the company IFA said (0.65% a year), and I can also transfer my old personal pension plan fund in (with Allied Dunbar).

The IFA has recommended a "Balanced managed" Fund (similar to Allied Dunbar's) because I have 20 years before retirement age (booh!)

My question is what happens if Aegon Scottish Equitable or the IFA go bust? Can I lose my pension fund before I draw my pension?

With all of this bad news about shares and investments, I am thinking that I might just as well save in a bank account because at least there is a compensation scheme!

What should I do?
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  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
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    fact_hunt wrote: »
    Hello, I have the opportunity to join a group personal pension plan (GPP??) with my new employer. The charges are low, or so the company IFA said (0.65% a year)

    Correct
    and I can also transfer my old personal pension plan fund in (with Allied Dunbar).

    Beware of penalties if you do this, though it may still be sensible to do it.
    The IFA has recommended a "Balanced managed" Fund (similar to Allied Dunbar's) because I have 20 years before retirement age (booh!)

    A very lazy and old fashioned piece of advice requiring no expertise whatsoever.
    My question is what happens if Aegon Scottish Equitable or the IFA go bust? Can I lose my pension fund before I draw my pension?

    No.You will be covered under the Financial services compensation scheme.
    https://www.fscs.org.uk
    With all of this bad news about shares and investments, I am thinking that I might just as well save in a bank account because at least there is a compensation scheme!

    Compensation for pensions lost in bankruptcy cases is higher than for cash as there is no upper limit.
    Trying to keep it simple...;)
  • dunstonh
    dunstonh Posts: 116,717 Forumite
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    The charges are low, or so the company IFA said (0.65% a year)
    That is low.
    The IFA has recommended a "Balanced managed" Fund (similar to Allied Dunbar's) because I have 20 years before retirement age (booh!)
    If your knowledge of investments is weak and/or the fund range isnt strong then this option is fine. Its a novice option which experienced investors wouldnt really want but its certainly not a bad option
    My question is what happens if Aegon Scottish Equitable or the IFA go bust?
    You are not invested with the IFA so it doesnt matter if the IFA goes under. Pensions are protected under the FSCS life and pensions protection scheme which is 100% on first £2000 and 90% on the rest with no upper limit. However, with unit linked investments that doesnt really matter as unit linked funds are ringfenced so its a non-issue.
    Can I lose my pension fund before I draw my pension?
    Only if every single investment held in your pension fails. If that happens then I wouldnt worry about it as we will be in anarchy by then.
    With all of this bad news about shares and investments, I am thinking that I might just as well save in a bank account because at least there is a compensation scheme!
    Clearly not a good decision to make. Especially if the employer is making contributions.
    What should I do?
    Listen to the expert that you employed to give you advice. The IFA.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • purch
    purch Posts: 9,865 Forumite
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    Fund (similar to Allied Dunbar's)

    One good thing you can say about Allied Crowbar (maybe the ONLY good thing) is that their Managed Pension AP fund is one of the best amongst it's peers over the last 10-15 years

    'Similar' might not mean equally as good.
    'In nature, there are neither rewards nor punishments - there are Consequences.'
  • dunstonh
    dunstonh Posts: 116,717 Forumite
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    AD pensions also tended to have very heavy contribution charges but zero annual management charges. I wonder if the company IFA is doing this on execution only rather than advice basis (not much scope for pension transfer advice with a 0.65% amc)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • fact_hunt
    fact_hunt Posts: 6 Forumite
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    Thanks for the information, but what does this part mean?...

    However, with unit linked investments that doesnt really matter as unit linked funds are ringfenced so its a non-issue.

    Thanks in advance.
  • project500
    project500 Posts: 61 Forumite
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    Its all very well telling us that we need to seek good financial advise from an expert .But the majority of experts IFA or whatever are lost in the current financial market.Unless they are very old and were financial advising through the depression of the 30s and war years they will not even have experienced this type of market before.I doubt if anyone has any expert advise that could be soundly taken at the moment,even the big hitters are all stood looking pale faced and dumb founded .Certainly no advice that will make money (unless you get involved with a risky hedge fund) as its a case of damage limitation in not loosing as much of your money as possible that seems to be the best you can hope for. Its all fine and dandy saying after the rout it will all take off again with new 30 year bull market but that could be years away and will we have any left by then to invest?

    Common sense tells me I want my cash out of the sinking pound and placing in cash with one of the few really strong economies like Singapore .But where will you find a financial advisor in the UK that will deal with ordinary people on this type of investment?
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
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    project500 wrote: »
    .Unless they are very old and were financial advising through the depression of the 30s and war years they will not even have experienced this type of market before.

    Clearly you're not aware it was much worse in the 1970s - a period which many people can remember. ;)

    And look what happened between then and now. :)
    Trying to keep it simple...;)
  • fact_hunt
    fact_hunt Posts: 6 Forumite
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    Hello everyone! A friend of mine told me to have a look at the pensions advisory service website :

    http://www.pensionsadvisoryservice.org.uk/miscellaneous/financial_services_compensation_scheme/

    and it says...

    Compensation payments are limited. For personal and stakeholder schemes, compensation is limited to 100% of the first £30,000 and 90% of the next £20,000, making a grand total of £48,000. For annuity contracts, compensation is limited to 100% of the first £2,000 and 90% of the remainder of the claim

    As my existing pot is in a personal pension and the new scheme is a group personal pension, it appears that any protcetion is limited to just £48,000 ? Do any of the financial advisers on here have an opinion ?? :confused:

    Cheers
  • dunstonh
    dunstonh Posts: 116,717 Forumite
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    The pensions advisory service is wrong. I have phoned them up and they are looking into it.

    Pensions and life assurance come under the life and pensions protection. The investments protection (that you mention) is for unwrapped investments (such as unit trusts).

    http://www.fscs.org.uk/consumer/key_facts/limitations_of_the_scheme/compensation_limits/

    I have also checked a number of provider KFDs and they all state you are covered for at least 90%.

    However as its unit linked its really a non-issue.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • fact_hunt
    fact_hunt Posts: 6 Forumite
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    dunstonh wrote: »
    The pensions advisory service is wrong. I have phoned them up and they are looking into it.

    Pensions and life assurance come under the life and pensions protection. The investments protection (that you mention) is for unwrapped investments (such as unit trusts).

    http://www.fscs.org.uk/consumer/key_facts/limitations_of_the_scheme/compensation_limits/

    I have also checked a number of provider KFDs and they all state you are covered for at least 90%.

    However as its unit linked its really a non-issue.[/quote]

    Sorry, but I dont understand this; why is it a non-issue? :confused:
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