The Financial Services Compensation Scheme (FSCS) has sounded a warning to people saving for, or in, retirement after research showed that just one in eight is taking advice from an Independent Financial Advisor (IFA) while one in five has considered riskier pensions and investment products because of poor returns from mainstream products.
The prolonged, historically-low interest savings environment has had a direct impact on retirees’ financial decisions, tempting them to look at investment products that they would not usually consider.
Moreover, while the majority of those investing said they knew all their investments were FSCS protected, only 36 percent of investors knew the exact amount of FSCS protection available for their money.
That could lead to them unknowingly putting their money into investment products beyond FSCS’s compensation limit should the provider go out of business. The FSCS maintain that this highlights the importance of consumers checking if their pensions and investments are FSCS protected.
Says Caroline Rainbird, FSCS’s CEO: “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 investment products are FSCS protected.”
Some people in or approaching retirement, says the FSCS, are already beginning to explore potentially riskier options such as cryptocurrencies; some of their values soared recently, but they are not subject to the same regulations as other investments, values can fluctuate significantly and investors may not enjoy the same consumer protections.
The FSCS has launched a new Pension Protection Checker tool – www.fscs.org.uk – which not only provides useful information to savers but also suggests questions for them to ask their providers
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