Multiple SIPPS & £85,000 FSCS limit

[Zazous]

I have around £200,000 in a Standard Life stakeholder pension which I'd like to convert to a SIPP...or SIPPs!

I'm a bit concerned by the £85,000 FSCS compensation limit. Would it be prudent and cautious to open 3 SIPPs with different providers to ensure that worst case scenario and one of them folds I'm within the compensation limit?

Any thoughts much appreciated.

For info: I have no plans to take an annuity, am still contributing around £1,300 per month to my pension and plan to retire in a couple of years time.

Andy

[Alaric]

II'm a bit concerned by the £85,000 FSCS compensation limit. Would it be prudent and cautious to open 3 SIPPs with different providers to ensure that worst case scenario and one of them folds I'm within the compensation limit?

Assets in a SIPP are held outside of the SIPP provider, so after a probable delay they are returned. Be a little wary of where cash is placed as when a bank goes under, it can hold onto deposited cash. As such SIPP providers usually say that cash is spread around rather than concentrated in one place.

[Urbandreamer]

I have around £200,000 in a Standard Life stakeholder pension which I'd like to convert to a SIPP...or SIPPs!

I'm a bit concerned by the £85,000 FSCS compensation limit. Would it be prudent and cautious to open 3 SIPPs with different providers to ensure that worst case scenario and one of them folds I'm within the compensation limit?

While I do have two SIPP's, I wouldn't be too concerned about the FSCS limit (or specifically I am not).
As has been said, a lot of protections are in fact put in place. You should also be aware that in most cases you are not dealing with £'s. Your SIPP will likely most be invested in equities, which change in value on a daily basis. These holdings are usually held by a nominee. The FSCS compensation is for cash.

There are costs to running a SIPP, only you can decide if the additional costs of duplication, triplicate are worth it.

So why do I have two SIPP's? Well each provider offers something different from the other. I'm willing to pay for that. Indeed one of mine makes dealing with foreign currency aka dividends easy, remember what I said about not dealing with £'s.

It may also be worth pointing out that, unless one of these pensions is an employer scheme, you will only be able to pay into one SIPP a year.

[ursaminortaur]

I have around £200,000 in a Standard Life stakeholder pension which I'd like to convert to a SIPP...or SIPPs!

I'm a bit concerned by the £85,000 FSCS compensation limit. Would it be prudent and cautious to open 3 SIPPs with different providers to ensure that worst case scenario and one of them folds I'm within the compensation limit?

While I do have two SIPP's, I wouldn't be too concerned about the FSCS limit (or specifically I am not).
As has been said, a lot of protections are in fact put in place. You should also be aware that in most cases you are not dealing with £'s. Your SIPP will likely most be invested in equities, which change in value on a daily basis. These holdings are usually held by a nominee. The FSCS compensation is for cash.

There are costs to running a SIPP, only you can decide if the additional costs of duplication, triplicate are worth it.

So why do I have two SIPP's? Well each provider offers something different from the other. I'm willing to pay for that. Indeed one of mine makes dealing with foreign currency aka dividends easy, remember what I said about not dealing with £'s.

It may also be worth pointing out that, unless one of these pensions is an employer scheme, you will only be able to pay into one SIPP a year.

As far as I am aware you can have as many SIPPs as you wish and pay into them all in the same year - the only restriction is that your total contributions for the year into all your pensions cannot exceed the minimum of your earnings and the annual allowance / ( your current annual allowance plus unused allowances from the past three years if making use of carry-forward ).

Although you are unlikely to lose your pension and need FSCS compensation if the Sipp provider fails it is worth bearing in mind that in those circumstances you could lose access to your funds for some considerable time whilst things are sorted out and the funds transferred to another pension provider. Hence it might make sense to split your pension funds between two SIPP providers if you are about to go into drawdown and the SIPP will be providing your only or most of your income. This is less necessary if you have other sources of income eg company pension, ISA(s) held with other providers etc etc

[Zazous]

Many thanks @Urbandreamer @Alaric for your responses, really helpful and very much appreciated