FSCS Protection Limits for SIPP Providers

Hello,

I currently have 3 different SIPP providers, and 2 of them are now over £100k each. I am wondering if I need to be thinking about having too much with any one provider. I understand for cash savings the FSCS protection is limited to £85,000. Does the same concept apply to pensions? Should I limit each provider to £85k, or is it okay to have higher amounts (which I guess reduces fees)?

Thanks,

Hi Hayden

SIPP providers typically don’t hold the assets themselves; they generally only hold the cash that you may have with them. What I mean by this is that if a SIPP provider were to default, you could transfer your funds to another provider because your assets are kept separate from theirs. However, FSCS protection for pension providers is usually limited to £85,000 per person for the cash that the provider may hold. When it comes to the investments in your pension, if they lose value due to market conditions or investment choices, that is simply the risk of investing, and FSCS doesn’t provide compensation. However, if a fund fails due to fraud or mismanagement, you may be able to claim FSCS compensation, which is capped at £85,000 per person, per fund manager (not per individual fund).

In summary, you don’t need to worry too much about how much you have with one SIPP provider. The greater risk lies in what your funds are invested in, whether they’re diversified, and if they align with your risk tolerance.

Hope this helps