A new study conducted by the Financial Services Compensation Scheme (FSCS) suggests the UK’s prolonged low-interest environment is encouraging retirees to consider riskier pensions and investment products, which could ultimately result in them losing significant sums of money.
Taking a risk
The FSCS poll of 2,000 retirees aged 55 to 75, found that one in five had been tempted to invest in riskier products than they would normally consider due to the lure of a higher rate of return. Surprisingly, however, the research also found that less than one in eight respondents had consulted a financial adviser in order to explore how they could make their money work harder for them.
Commenting on the findings, FSCS Chief Executive Caroline Rainbird confirmed there had been a rise in the number of people seeking compensation from the scheme. She added, “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.”
Importance of advice
This FSCS survey, once again, highlights the importance of seeking expert financial advice before taking out pensions or investment products. Not only does professional advice provide peace of mind, it will also ensure that investors are not taking any undue risks with their hard-earned cash.
If you are approaching, or have already reached retirement, and would like to discuss how to maximise the return on your savings, please get in touch.
Please note that the value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.