3 min Read
05 Jan 2012

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

More about Damien

Reader Question: Is my pension safe if the provider goes out of business?

Get an answer to your financial question online Reader Question:

I have AVC's (Additional Voluntary Contributions) invested with Blackrock (a mix of bonds/cash/equity). Should Blackrock (or other similar FSA regulated institution) go into financial difficulties are my investments protected ? I know this is not covered by the FSCS scheme. Or put it another way, can Blackrock use my investments to meet other financial obligations that they have ? I had assumed not and therefore my underlying investments would remain safe even if Blackrock went out of business?


My Response:

Good question.

Assuming Blackrock are the AVC provider and it is a money purchase arrangement then the level of protection will depend on how the AVC is invested, much like with a personal pension arrangement.

With unitised investment funds (non-with profits) then the investments are ring fenced from Blackrock's own assets. So if they or your employer go to the wall your pension pot should still be protected.

If your AVC is invested in with-profit funds then should the fund not be able to pay out then the Financial Services Compensation Scheme (FSCS) will likely kick in (protecting up to 90% of a claim with no upper limit)

With cash investments (ie deposits) the level of protection depends on how the money is held. For example if under the AVC the trustees offer a cash deposit investment which is held in an account with a bank or building society. Because it is a single account (not separate accounts for each investor), the £85,000 limit on compensation for deposits will apply to the account as a whole and not to each members' individual account. If the money is held in individual accounts for each AVC member then separate £85,000 compensation limits are likely to apply

I hope that helps


Best Wishes



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