At a time where it is becoming harder to save up adequate sums for retirement, a new study shows that the UK’s low interest rate environment is causing retirees to turn to riskier pension and investment products which could potentially lose them a significant sum.
A poll from the Financial Services Compensation Scheme (FSCS), shows that one in five people aged between 55 and 75 have been tempted to invest in riskier products than those they would ordinarily be comfortable with, lured by a higher rate of return. And, surprisingly, less than one in eight had taken financial advice to explore alternative options for making the most of their cash.
This has resulted in a rising number of people seeking compensation under the FSCS arrangements, said Chief Executive Caroline Rainbird. She continued, “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.”
Professional advice is key The FSCS survey is yet another example of research vividly highlighting the importance of seeking professional financial advice before investing in little-known products. Advice helps investors explore and understand the risks before taking the plunge and putting their hard-earned money at risk. Whether you’re approaching retirement or have already retired, we can assist you in maximising your savings whilst minimising the risk.
The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.