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

1 min Read Published: 05 Jan 2012

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



The material in any email, the Money to the Masses website, associated pages / channels / accounts and any other correspondence are for general information only and do not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation. See full Terms & Conditionsand Privacy Policy.

Image: renjith krishnan /