New research from the Financial Services Compensation Scheme (FSCS) exploring the financial attitudes and behaviours of retirees has found that one in five (20%) 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 (IFA) 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.
This riskier attitude to investing highlights just how important it is for consumers to check if new or existing pensions and investments products are FSCS protected. To help consumers check if their pension is protected, FSCS has launched a new Pension Protection Checker tool, which provides useful information and questions to ask their providers. While more information about FSCS investment protection limits, including a protection explainer video, can be found on the FSCS website.
Caroline Rainbird, FSCS’s CEO, 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 offers guidance on how to check for FSCS protection, including our new Pension Protection Checker tool and investment protection explainer video.”
This research is part of a new campaign launched by FSCS to highlight the importance of checking new and existing pensions and investments are FSCS protected.