Don’t score an own goal with your pension warns FSCS - midlands

• As part of a campaign to protect consumers from losing money on their pensions, FSCS urges those most at risk to check their pension savings are FSCS protected.
• More than half (56%) of pensions claims made to FSCS in the last year came from customers aged between 55 and 64.
• The Midlands tops the list of English regions with the highest number of FSCS customers who lost money in their pensions last year.

With the countdown to the World Cup well underway, sports pundits up and down the country will no doubt be dusting off tried and tested references to one of football’s most famous wins - when England brought home the coveted trophy in 1966.   Many fans born in the famous winning year, who can claim to have been around when it all happened, will be looking forward to their own countdown towards retirement.

While football may be front of mind for many of those fans right now, the Financial Services Compensation Scheme (FSCS) is urging everyone to remember to check that their retirement is secure by making sure their pensions are FSCS protected.

Latest figures from FSCS suggest those born in 1966, who will be around 10 years off the UK retirement age, are among those most at risk of losing money on their pensions. Over the last 12 months, more than half (56%) of pension claims received by FSCS came from customers aged between 55 and 64.

While customers come to FSCS from all over the country, the figures show that the Midlands tops the list of English regions with the highest number of customers who had lost money in their pensions last year. 

A former worker, Paul from Lincolnshire, was one such customer. Paul had saved more than £99,000 in his pension over many years working at the supermarket. After leaving the company, Paul received a call informing him that under the terms of his pension his disabled wife would only get a third of his pension pot if he passed away before her. 

Concerned about his wife’s care once he was no longer around, Paul was persuaded to transfer his pension into an unsuitable Self Invested Personal Pension (SIPP) which he was informed would allow his wife to receive 100% of his pension savings in the event of his death. Unfortunately, the company operating his SIPP failed and Paul was devastated to learn that he stood to lose all the money he had invested. Luckily, Paul’s pension was protected and FSCS was able to pay back £78,000 of the money he had lost. Without this compensation, the loss would have been catastrophic as the couple, who could not rely on his wife’s much smaller pension, would have been forced to sell their home.

Not everyone who has lost money on their pension will be as fortunate as Paul. Some customers who come to FSCS with a pension claim, won’t be able to recover any of their money because their pension was not FSCS-protected. While others, like Paul, will only be able to recover a proportion of their money because their losses were far higher than the £85,000 compensation limit that FSCS is able to pay.  

In the last financial year, FSCS saw almost 1,400 claims relating to pension advice alone, including advice to transfer a pension, that were above the FSCS compensation limit. This figure has risen steadily over the past six years, resulting in over £450m of uncompensated loss to customers.

FSCS research over the last couple of months suggests the number of people putting their pensions at risk is likely to grow as the cost-of-living crisis deepens. In a survey of more than 1,200 people, FSCS found that, when asked specifically about the impact of the cost-of-living crisis, 1 in 5 UK adults, who are aged over 55 and eligible to withdraw money from their pension, have already done so over the last few months, with 13% likely to do so within the next six months.  While potentially higher returns could be motivating some of these investment decisions, the research also shows almost a third of survey respondents had taken money out of their pensions over the last few months to support themselves with day-to-day expenses.

Lila Pleban, FSCS's Chief Communications Officer, said: “With rising costs and continued economic uncertainty impacting us all, many across the country will welcome the chance to set aside financial worries and come together to enjoy this month’s football highlights.  As we all share our hopes for another milestone football win, we urge everyone who may be looking forward to their own retirement milestone to check that their pension is FSCS protected. 

Whether deciding to access hard-earned pension savings or move a pension to a new provider, it’s vital to consider where you put your money and understand how it is protected.  A loss in your pension savings is a loss that most of us can ill-afford, so don’t score an own goal with your pension, check that it’s FSCS protected.”

FSCS provides online tools to help people check if their pension is FSCS protected.  Check your pension is protected today by visiting www.fscs.org.uk/pension-protection-checker.

Media enquiries
Please contact Farah Baldock e: farah.baldock@fscs.org.uk or email publicrelations@fscs.org.uk