Your money and pension pots are protected despite bank runs

There is little more disturbing than news of bank runs, government bailouts and plummeting bank stock prices – we saw all of that last week. Silicon Valley Bank in the US collapsed and HSBC had to bail out its UK branch. Then the troubled banking giant Credit Suisse announced it had secured a £45bn bailout from the Swiss central bank. Meanwhile, shares of British banks have been tampered with.

But while the headlines may sound like they have a whiff of the global financial crisis surrounding them, the circumstances are very different.

Banks are in much better shape than they were in 2008. They have to comply with stricter Bank of England regulations and are regularly stress tested to see how they would fare in various difficult events. Even if things go wrong, UK savers and investors benefit from a number of protections.


In the highly unlikely event that your bank, building society or credit union goes bankrupt, you should get your savings back, provided you meet certain conditions.

First, the provider holding your funds must be authorized by the Financial Conduct Authority (FCA) and covered by the Financial Services Compensation Scheme (FSCS). They should clearly advertise if they have this coverage. You can also check on the FSCS website at

Crisis: US technology bank Silicon Valley Bank collapsed after companies took deposits

Second, you will only get back savings worth up to £85,000 per bank. If you have a joint account you are covered up to £170,000. Laura Suter, head of personal finance at investment platform AJ Bell, says: ‘This means ideally you don’t want more than £85,000 with any provider, even if it’s spread across several accounts.’

There is protection for all accounts within the banking group, not per account, so watch out for banks with some brand names. For example, First Direct is owned by HSBC and Royal Bank of Scotland is another brand under NatWest bank.

If you have a temporarily high balance, you can get protection up to £1 million for up to six months.


Your investment provider must not go bankrupt. They’re very tightly regulated, so they don’t. Even if that’s the case, your provider should keep your money safe in a separate customer account. If something goes seriously wrong, you should get FSCS protection worth up to £85,000. In addition, if a reputable company gives you bad advice or is negligent in managing your investments, you are covered.

However, you will not receive any compensation if your investments fall in value as a result of movements in the financial markets. That is only part of the risk of investing.

Before investing, check that the company is authorized by the Financial Conduct Authority or the Prudential Regulation Authority. Make sure it is regulated to perform the specific activity it offers you, for example providing investment advice.

Some forms of investment offer no protection. These include cryptocurrencies, mini-bonds, and peer-to-peer lending.


If your pension provider goes bankrupt, the compensation you are entitled to will be determined by the type of pension you have and whether it is regulated by the FCA.

Defined contribution pensions: These are pension schemes in which both you and your employer pay a fixed monthly amount.

Although these schemes are arranged by your employer, your money is held and managed by a separate pension provider. This means that if your employer goes bankrupt, it will not affect your pension assets. Whether your savings have FSCS protection if the pension provider goes bankrupt depends on how your scheme is set up. You can inquire about this with your pension provider.

Self Invested Personal Pensions: In most cases, if your Self Invested Personal Pension (Sipp) provider were to go out of business, you would receive up to £85,000 in FSCS compensation.

However, some providers structure their Sipps to cover all of your savings. Ask your provider what protection it offers.

Defined benefit pensions: Also known as final pay, this type of workplace pension provides a guaranteed income upon retirement. It is up to your employer to ensure that sufficient funds are available to pay out.

Pension funds are usually segregated from the company balance sheet, so even if your employer gets into financial difficulties, your retirement should be protected.

If the scheme is unable to pay, your pension will be taken over by the Pension Protection Fund (PPF), a lifeboat fund set up by the government.

Becky O’Connor, director of public affairs at pension provider PensionBee: ‘The PPF reimburses you 100 percent of your pension if you have already reached the pensionable age of the scheme when your employer goes bankrupt.

“If you have not yet reached the retirement age of the scheme, you are only entitled to 90 percent compensation, up to a certain limit.”

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