"We are seeing increasing numbers of customers seeking compensation from FSCS due to failed pension and investment products, or poor advice."
New research from the Financial Services Compensation Scheme (FSCS) has found that 20% of retirees have considered riskier pensions and investments products, as they offer a higher rate of interest.
The research – conducted among retirees between the age of 55 and 75 – found that the UK’s prolonged low interest savings environment has had a direct impact on retirees’ financial decisions, tempting them to review high interest investment products that they would not usually consider.
Surprisingly, by comparison, just 12% of retirees said they have taken advice from an independent financial adviser to see how they can make their money go further.
More than a third (36%) of consumers have invested their money after retiring. Although the majority (69%) of those investing said they knew all their investments were FSCS protected, only 36% of investors knew the exact amount of FSCS protection available for their money. This means they could unknowingly be investing money in investment products beyond FSCS’s compensation limit, which would likely be lost if the provider went out of business.
Caroline Rainbird, CEO of the FSCS, said: “We are seeing increasing numbers of customers seeking compensation from FSCS due to failed pension and investment products, or poor advice.
“The real danger is that if consumers choose to put money into high interest pension and investment products that are not FSCS protected, they could lose life changing sums of money from their retirement pots if the product provider fails.
“For peace of mind, consumers should always check that new or existing pensions and investments products are FSCS protected. Our website, www.fscs.org.uk, offers guidance on how to check for FSCS protection, including our new Pension Protection Checker tool and investment protection explainer video.”