The Financial Services Compensation Scheme has warned that retirees are being tempted to put money into investment products claiming to offer high returns due to the prolonged low interest savings environment.
One in five retirees has considered riskier pension and investment products as they offered a promised higher rate of interest or return, according to new research from the compensation body.
The FSCS said these high return products would, in normal times, be mostly ignored by savers and investors.
The research also found that just 12% of retirees have taken advice from an adviser to see how they can make their money go further.
The research also looked at how retirees viewed the protections offered by the FSCS. Although the majority (69%) of those investing said they knew all their investments were FSCS protected, only 36% of investors knew the exact amount of FSCS protection available for their money.
The FSCS has launched a new Pension Protection Checker tool to help consumers check if new or existing pensions and investments are FSCS protected.
Caroline Rainbird, CEO at the FSCS, said: “We are seeing increasing numbers of customers seeking compensation from FSCS due to failed pension and investment products, or poor advice.
“The real danger is that 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.”
• The research was conducted among retirees between the age of 55 and 75 online by OnePoll on behalf of FSCS between 12 February 2021 and 26 February 2021. OnePoll surveyed 2,000 retirees.