Research by the UK Financial Services Compensation Scheme (FSCS) found that consumers have very little understanding of what the organisations does and its compensation limits.
The study produced some staggering results.
Over two-thirds (68%) of the 2,735 UK adults who took part thought that FSCS protection for pensions was limited to £5,000 ($6,534; € 5,778).
At the time the research was carried out – October 2018 to January 2019 – it was £50,000 and has since risen to £85,000 from 1 April 2019.
But only 4% of respondents (around 20 people) were actually able to identify the correct figures.
Similarly, the majority (74%) did not believe that the FSCS protection covered pension products in general.
Previous research also highlighted that people would be more likely to invest more in their pension if they knew their fund was protected.
Raising awareness
Given the surprisingly low level of understanding about how the scheme works and how much money is covered, International Adviser reached out to the FSCS to find out how it plans to raise awareness.
A spokesperson told IA that, while it had already set up a working group 18 months ago to come up with best practice guidelines, the scheme is going to be working closely with pension providers to ensure they inform their customers about the role of the FSCS and its protection limits.
Mark Neale, chief executive of the 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.”
