The Financial Services Compensation Scheme (FSCS) has said the limit people can claim for the loss of their pension should rise closer to £375,000.
Currently, clients of collapsed pension firms can only claim up to £85,000 from the lifeboat fund, which means many will face a shortfall where their pension claim is in excess of the current cap.
‘FSCS believes that our current compensation limits remain appropriate for most products and activities covered by FSCS protection and continue to represent an appropriate balance between protecting consumers and the resulting cost to industry levy payers,’ it said.
‘There is an important exception when it comes to pensions. In this specific area, we believe that the FSCS compensation limit of £85,000 should be higher. We would like to see it reviewed, with a view to reducing the gap between FSCS’s limit and the amount the Financial Ombudsman Service can tell a business to pay, which is £375,000 as of 1 April 2022.’
Whilst this is unlikely to be implemented to work retrospectively, it’s a welcome development for any new claimants where their full pension pots have been lost and bring both regulatory systems into some parity. Ultimately consumers will be further protected and we welcome the announcement.
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