Security of SIPP Providers, what compensation?

[chewyjoint]

I am just taking a fairly large CETV from a final salary scheme and transferring it to either a SIPP or a Personal Pension. My original plan was to go into a SIPP as it's flexible and offers low charges, however my IFA has suggested looking at Personal Pensions on the basis that they potentially offer more protection in the event of a problem with the provider.

This is not an area I'm at all familiar with but am keen to understand fully the levels of protection / compensation offered.

One area of particular concern is that if I hold a significant element of my pension in cash, as I am tempted to do for the first few months, presumably I am then taking a risk with the liquidity of the bank used by my SIPP or pension provider? Personal Pensions seem to be fewer and further between and, from what I can see, limit your choice of investment vehicles mainly to funds which I am keen to avoid due to cost.

If anyone can offer advice or suitable links to help with research then I'd be grateful.

Thanks

[Raptor]

I do not suppose your IFA is making any money out of the suggestion is he?

Mind you it is always worth checking, I did when putting all my pensions into a Hargreaves SIPP. As previous poster said your funds are safe unless there is fraud and so the only real question is which supplier is best for you.

Raptor.

[gadgetmind]

Here is HL's security statement. Most SIPP providers will gave similar.

http://www.hl.co.uk/investment-services ... investment

As for SIPP versus Personal Pension, unless you need the bells and whistles, there isn't much in it. Yes, SIPPs offer more options, but do you really need them?

I have a BestInvest SIPP in which I use ETFs for the major markets, bonds, property, etc. and then I have some ITs for smaller companies, and some other areas. I also have a Friends Life group personal pension, in which I mainly use a fund called FL Balanced Index Enhanced Fund of Funds, which uses active (but not massively so) asset allocation on top of mainly Blackrock Class D trackers.

Both approaches deliver fees of sub 0.5% pa including fund and platform charges (but note I get a special "grandfathered" deal from BI). I measure the performance of the two against each other and there really isn't much in it TBH and I do wonder whether the rebalancing and generally "clucking around" that I do in the SIPP is worth the effort.

TBH I'd look at drawdown options and fees at this stage, what funds are available, what fees are like, and make a decision based on this. A Personal Pension may well do what you need.

[swill453]

I am just taking a fairly large CETV from a final salary scheme and transferring it to either a SIPP or a Personal Pension. My original plan was to go into a SIPP as it's flexible and offers low charges, however my IFA has suggested looking at Personal Pensions on the basis that they potentially offer more protection in the event of a problem with the provider.

Did the IFA justify this statement? I can't see any reason for it. A SIPP is a Personal Pension, after all.

Scott.

[taken2often]

The biggest risk with all providers is cash. You only have cover up to about 75k or around that. Used to be 85k.

In cash you also have higher risk regarding employee fraud. Hargreaves Lansdown sent me a verification of cover for the current year.

This shows two elements of 40 mil each. One for comprehensive crime and one for executives and officers Liability. Not many would provide this.

So although some say H-L is a bit expensive. It is pretty good value if you examine all the elements they supply. You have to be a client
or have a client show you all the benefits, to make a proper decision. I have found them to be very good. If they make a policy mistake they are prepared to acknowledge it and fix it. Not many are prepared to do that.

Bob