Solvency of pension providers

[3CC]

In light of the recent Northern Rock debacle, does anyone know where I can get some information on the security of potential pension providers?

DM

 

[Brendan Burgess]

It is an interesting question.

I think that most pension providers are managing pension funds. If Eagle Star, for example, goes to the wall, the pension funds would be legally separate and unaffected.


The main risk you face in choosing a provider is that you will pay high charges.

 

[Sherpa]

I think that most pension providers are managing pension funds. If Eagle Star, for example, goes to the wall, the pension funds would be legally separate and unaffected.

No, that's not the case. Your pension fund with Eagle Star (for example) is not legally separate. If the insurance company goes to the wall you could in theory lose some or all of your fund. In addition, there is no equivalent of the deposit insurance scheme for insurance companies.

 

[hlm]

Insurance companies have to satisfy stringent solvency levels with the regulators, they are so stringent that it was one of the reasons Equitable got into trouble a few years ago, they were still solvent, but didn't satisfy the required level. An investment manager is different, and will typically have a custodian separate to them to safeguard the assets. Your question isn't specific, is it a general query or something in particular that's worrying you.

 

[3CC]

No, I have no specific reason to be concerned. It's just that many people have much more tied up in their pensions that they do in their savings accounts so I think that a proportional amount of consideration is needed in selecting a pension provider.

DM