Understanding the risks

Many things we do in life have some type of risk attached to them. So unsurprisingly, saving for a pension involves risks too. There is the risk that you may not save enough by retirement to take care of your needs. There is the risk that the funds your pension account is invested in don’t perform as you expect them to. There is also the risk of exceptional events - losing money because of the bankruptcy or negligence of a fund provider.

While the chances of an ‘exceptional event’ occurring are very unlikely, and regulatory bodies ensure there are protections in place to reduce this risk, you should understand it and what Fidelity does to help protect your savings against it.

Your pension pot is invested with a Fidelity company called FIL Life Insurance Limited (FIL Life). FIL Life has the contractual relationship with the underlying fund providers to give you access to your plan’s investment choices.

If one of these fund providers or FIL Life lost part or all of the money invested in one or more of their funds because of an exceptional event, and your pension account was invested in the affected FIL Life fund(s), the value of your investment in that fund would fall. The value of your pension account would be adjusted to take account of any losses. If the exceptional event was severe enough, you could lose some or all of the money you had invested in that fund.

FIL Life would pursue the fund provider or an appointed receiver (the person responsible when a company becomes insolvent) for the full amount owed. However, we cannot guarantee the amount you would receive back.

How is my pension protected?

The risk of an exceptional event is unlikely because of a number of wide-ranging protections:

Regulatory protection
Investment governance
The UK Compensation Scheme

Is my pension pot secure?

The regulations in place as well as the governance measures undertaken by Fidelity help to protect your pension pot. These measures aim to reduce the risk to your account. However, we cannot guarantee the security of your account, and these measures don’t fully protect your pot against an exceptional event. Please note, when we talk about the security of your account we don’t mean that its value won’t change. The value of the investment funds your account invests in changes every day. The value goes up and down, for example, as stock markets move. So the value of your pension account may go up and down. This is investment risk, a normal part of investing. It is not an exceptional event.