News in brief... the cost of retiring abroad

⬤ More than 40,000 savers have made claims for compensation of almost £2bn from the Financial Services Compensation Scheme (FSCS) since 2019 following the collapse of their pension provider or financial adviser. The FSCS is urging people to check whether their providers and advisers are properly authorised by financial regulators. The FSCS only covers losses from failures of authorised firms, so this is crucial. You can check the status of your providers on the scheme’s website at fscs.org.uk.

⬤ Planning on retiring abroad? If so, and you move to a country that does not have a reciprocal pensions agreement with the UK, don’t underestimate how much you will be giving up in state-pension benefits. Hundreds of thousands of pensioners who have retired to countries including Australia, New Zealand, Canada and South Africa aren’t entitled to the annual increase in state pension their peers back home receive.

The cost of missing out adds up over time. Interactive Investor says the lost income could total £160,000 over a 30-year retirement.

⬤ New rules aimed at giving savers a more accurate idea of how their pension investments will grow could actually mislead many people, advisers are warning. The new regulations, introduced last October, require pension providers to estimate the value of people’s pensions according to the volatility of their funds over the past five years – rather than assuming an industry-standard return rate, as was previously the case. Some providers are worried that periods of unusual investment returns will have a potentially misleading effect. Returns on gilts, for example, have been unusually volatile over the past five years; savers with gilts in their pensions are therefore currently being told these assets will produce higher returns in the future than has typically been the case in the past.