Many pension savers do not know whether they have protection if a firm goes bust

Two-fifths of pension savers have never checked whether their money is protected by a body which compensates people when firms go bust.

Some 40% of those saving into a pension have not checked whether their pension is protected by the Financial Services Compensation Scheme (FSCS).

If a pension provider or a financial adviser goes out of business, the FSCS may be able to step in and pay compensation. Protection varies depending on the type of pension product.

People can check pension protection by using a tool on the FSCS website at www.fscs.org.uk/pension-protection-checker.

The FSCS recommends people could ask their provider how much of their pot is protected and whether money transferred over from an existing protection would also be covered.

The survey of 2,000 people also found more than one in 10 (12%) people do not know when they last checked the balance of their pension pot and a fifth (20%) have never checked.

Caroline Rainbird, chief executive of FSCS, said: “The face of retirement has changed, and it never looks the same for any two people, but the importance and value of a pension remains the same.

“Those funds, which we build up over a long period of time, enable us to enjoy an important period of our lives – whether they are used to fund travel plans or hobbies, or provide for our families.

“While we don’t need to be checking our pension pots as often as our day-to-day accounts, it is important for people to know how much is in them, so they are aware whether they are on track to be able to afford their retirement dreams.

“When they are checking their current pension savings or thinking about making a change to their investments, it is also important to know their money is protected if something went wrong, for reassurance and peace of mind.”