Most people underestimate FSCS pension protection
The Financial Services Compensation Scheme (FSCS) has today published new research into consumer understanding of FSCS protection limits.
The research, undertaken by Ipsos MORI, found that over two-thirds (68%) of consumers think FSCS protection for pensions is limited to just £5,000. Only 4% of consumers (less than one in 20) were able to identify the correct level of protection. (see Notes for Editors 1)
The research also found that, without being prompted, only a quarter (26%) of consumers believe that FSCS protection covers pension products generally.
Previous FSCS research, announced in November 2018, 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. This shows that consumers are more likely to put their money somewhere that they know is safe.
In light of this, FSCS is working with industry to establish a set of best practice standards for pensions protection disclosure to ensure that consumers are armed with the right information to make an informed decision about their retirement.
Mark Neale, Chief Executive of FSCS, said: “This research confirms the currently low levels of consumer awareness of pension protections. Consumers can be confident that if they have a pension or an annuity, it is fully covered by FSCS should anything happen to their provider. Such protection is not the case for all financial products available to take you through retirement, so consumers should ensure that they are aware of the different protection limits.
“We are working with leading firms in the life and pensions sector to ensure that the industry agrees a consistent approach to disclosing pension protection information. This working group, launched 18 months ago, will shortly publish guidelines on how life and pension product providers inform consumers about FSCS.”
For more information contact Max Kelly at Hanover Communications at firstname.lastname@example.org.
The correct level of protection at the time of the survey (Oct. 2018 to Jan. 2019) was £50,000. The level has now been increased to £85,000 as of 1st April 2019, for firms declared in default on or after that date. Annuities remain 100% protected.
About the Ipsos Mori research
The findings are from a survey of 2,735 UK adults, carried out via a mixed methodology by Ipsos MORI between 29 October 2018 and 9 January 2019. The survey data has been weighted to be nationally representative of the UK population aged 18+.
For more about FSCS, visit our Notes for editors page.