One in five (20 per cent) retirees have considered riskier pension and investment products due to the prolonged low interest environment, according to research from the Financial Services Compensation Scheme (FSCS).

It found that retirees between the ages of 55 and 75 were tempted to look into high interest products that they would not usually consider.

Despite this, just 12 per cent of the retirees surveyed had taken advice from an independent financial adviser to assess how they can make the most of their retirement savings.

More than a third (36 per cent) of savers have invested their money after retirement, and although 69 per cent of those investing said they knew all their investments were FSCS protected, only 36 per cent knew the exact amount of protection available for their money.

The FSCS noted that this means those who did not know the exact amount could be unknowingly investing in products beyond FSCS’s compensation limit, which would likely be lost if the provider went out of business.

FSCS CEO, Caroline Rainbird, noted that the organisation has seen increasing numbers of customers seeking compensation from the 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,” she added.

In light of these concerns, the FSCS has launched a new Pension Protection Checker tool, which provides information and questions to ask consumers’ providers.

Commenting on the findings, B&CE director of policy, Phil Brown, said: “The findings by the FSCS are to be welcomed as this work shines more light on a very real issue.

“Our own recent New Choices, Big Decisions research revealed that since the introduction of pension freedoms in 2015, retirement savers have been faced with a new set of decisions that many are simply not equipped to deal with.

“The average saver does not understand investment risk or the fact that they could easily run out of savings before they die if they don’t plan well enough, or don’t seek expert advice or guidance. It’s down to policy makers and the pensions industry to come up with a solution which helps the average person navigate the choppy waters of pre-retirement decision making.”

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