The Money Charity is warning savers that retirees will need greater protection if firms become insolvent.

Since the beginning of April, retirees have had different options when it comes to what to do with their defined contributions, or DC pots.  Unfortunately, HR experts reported that all have significant gaps in how each are protected.  The Money Charity identified that if a firm collapses while a consumer is building up their pot, they’ll receive 90% of the fund value under the Financial Services Compensation Scheme (FSCS).  Once they access those savings, though, the levels of protection will vary greatly.  For example, if a person puts a lump sum in savings or a current account they’ll be covered up to £85,000 per banking licence holder.  However, if a user buys an annuity they’ll be covered for the entirety of their policy.

Overall responsibility for setting the compensation limits is split between the Financial Conduct Authority and the Prudential Regulation Authority.  The Money Charity is calling on both parties to review the levels of protection available to consumers across the market, as well as anyone who may try to access their retirement savings.  The Money Charity is requesting that these people in particular have access to guidance that will help them make fully-informed decisions on how to use their savings.