Less than one in twenty consumers are aware their pension is 100 per cent protected by the Financial Services Compensation Scheme if directly managed under a life insurance contract, research has found.
The FSCS consumer survey by Populus also found 49 per cent of respondents do not think FSCS protection applied to pension products.
The lifeboat scheme says there is low consumer awareness of the protection for funds taken out of a pension. Only 5 per cent of consumers knew there is protection of up to £50,000 available for any pension funds transferred into an investment product. And for annuities, it was only 5 per cent of respondents who knew of the unlimited protection the FSCS provides for these products.
Nearly half, 43 per cent,of consumers said they feel more confident if a pension promotes its FSCS protection and 78 per cent said they have a higher opinion of pension providers clearly communicating the FSCS protection available.
The body says it wants to improve consumer awareness of FSCS protection and to that end it is supporting an industry working group to identify a best practice standard for pensions disclosure.
FSCS chief executive, Mark Neale (pictured), says the findings are worrying: “Most pension products are fully protected by FSCS – so it is concerning so few know about this.
“Pensions are a safe, reliable investment to provide income for retirement. It is therefore essential that the public has confidence that their pension is protected.”
Neale explains the steps taken to improve awareness:
“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.”