Greater disclosure of FSCS protection by pension providers could unlock additional pension investment
New research indicates consumers will invest more in their pension if they are aware it is FSCS protected
The Financial Services Compensation Scheme (FSCS) has today published new research into consumer expectations about what pension providers should do to explain the protection that is available for their products.
The research, undertaken by Populus, found that of those with a pension, 29% of people would invest more if they knew that their pension fund was fully protected by FSCS. On average, each person within this group would invest a further £1,493 each year. Of those who said they would not invest more, the most common reason was that they do not have any spare money to put into their pension fund.
The research also looked at why consumers would invest more in a pension provider that prominently communicates the available FSCS protection. The findings show that 80% of respondents would feel “more reassured” by a pension provider that prominently communicates the fact that its products are FSCS protected.
Consumers were asked about the best ways that their pension provider could promote the FSCS protection. Two-thirds (66%) think that this information should be promoted on their annual statement and there was also support (37%) for it being communicated via their employer/employer’s HR department. Just under a third (31%) said the provider should highlight the FSCS protection on its website.
Mark Neale, FSCS Chief Executive, said: “We have seen with our work in the deposit sector just how important FSCS protection is in reassuring consumers and increasing their trust in financial institutions. This research suggests that more prominent promotion of FSCS can have a similar impact in benefiting both consumers and providers
in the pension sector. People will save more if they are confident their pension fund is safe and firms in turn will see reputational benefits if they prominently promote the available protection.
“In March 2018 we launched a group, representing leading firms in the advisory and wider life and pensions sectors, which is working together to look at developing an industry best practice standard for disclosure. This group will offer a benchmark on how life and pension product providers convey information about FSCS to consumers. Today’s research makes clear the benefits that doing this will have for everyone, and we look forward to continuing to work with the group to ensure these gains can be realised.”
 Source: Populus 2018. When asked what reason best explains why you would not invest more in a pension fund if you knew it was fully FSCS protected, 56% of respondents said: ‘I don’t have any spare money to put into my pension fund’.
For more information call Max Kelly at Hanover Communications on 07590 120533 or firstname.lastname@example.org.
Notes to editors
- About FSCS
FSCS is the UK's statutory compensation scheme for customers of authorised financial services firms. FSCS is funded by the financial services industry and protects investment business, deposits, home finance – mortgage – advice, and general insurance and insurance broking. FSCS can pay for financial loss if a firm cannot pay claims against it. We are independent, and do not charge individual customers for using our service.
Before FSCS can declare a bank, building society or credit union in default and pay compensation to its customers, it must be satisfied the firm cannot repay deposits because of its financial circumstances, and has no current prospect of being able to do so. For more information on FSCS, please visit www.fscs.org.uk.
- About the Populus research
The findings are from a survey of 2,067 UK adults carried out by Populus between 25-28 May 2018.