One in five retirees have considered turning to riskier pensions and investment products as they offer a higher rate of interest, the Financial Services Compensation Scheme has found.
Research from the lifeboat scheme, published this morning (April 28), 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.
It also found that out of the 2,000 55 to 75 year olds surveyed, only 12 per cent have taken advice from an IFA to go through their options to make their money go further.
The FSCS found more than a third (36 per cent) had invested their money after retiring. And although the majority (69 per cent) said they knew all their investments were FSCS protected, a mere 36 per cent knew the exact amount of FSCS protection available.
The lifeboat scheme said this meant savers could unknowingly be investing money in investment products beyond its compensation limit, which would likely be lost if the provider went out of business.
Caroline Rainbird, chief executive officer 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.”
The lifeboat scheme has urged savers to check whether new or existing pensions and investments products are FSCS protected.
To help with this, the FSCS has launched a pension protection checker tool, which provides savers with information and questions to ask their providers.
Rainbird added: “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.”
The research was part of a new campaign launched by the lifeboat scheme to promote the importance of checking whether pensions and investments products are FSCS protected.
The FSCS told FTAdviser it had focused on pensions and investments as these products were experiencing some of the greatest increases in volume and complexity of claims.
David Mitchell, British comedian, actor, writer and television presenter who currently works for the BBC as a team captain on the TV series 'Would I Lie to You?', was chosen to lead the campaign.
The campaign is running in several stages throughout 2021-22, with the first burst of activity running from March 29 until the end of May.
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