Billions vanish from retirement funds after pension providers shutter
Almost £2bn has been lost from UK pension pots in the last five years after the authorised financial providers and advisers managing them have gone out of business, with £800m unable to be refunded.
Over 43,000 claims have been made against companies that have gone bust and left people without a pension since 2019, data from the Financial Services Compensation Scheme (FSCS) has revealed.
While investors can sometimes get their money back, the FSCS is only able to refund pensions protected under FSCS compensation rules, which normally limit the compensation available to £85,000.
FSCS was able to pay back about £1.2bn in compensation over the last five years, meaning that investors were left with up to £800m in lost pension funds.
Among those who have lost money due to advisers going bust, 77 per cent were men, with 95 per cent of all claimants being between 45 and 75.
As part of a campaign to raise awareness of the risks around advisers going bust, FSCS has partnered with television presenter and football broadcaster Jeff Stelling.
The policy of pension funds going bust and leaving their customers without payouts famously came under scrutiny with the shutdown of Equitable Life in 2018, which saw 261,000 people sharing a payout almost two decades after it came close to collapse.
Martyn Beauchamp, interim chief executive at the FSCS, said: “The financial loss to people’s pensions that we see in our claims is substantial and has serious consequences for thousands of people every year.
“FSCS has long highlighted the importance of checking that your pension savings are protected, as these types of claims often come to us long after the financial harm may have occurred – and by that point it can often be too late to rebuild before retirement.”