In a week dominated by Pensions Freedom, you can be forgiven for missing the news that the compensation payable if your Annuity provider goes bust has been increased.
Currently, the Financial Services Compensation Scheme (FSCS) treats an Annuity as an insurance contract and therefore pays out 90% of the fund if an Annuity provider goes bust. The maximum amount of compensation is uncapped.
The FSCS has now announced that from 3rd July, the maximum amount of compensation will be changed to 100% of the fund.
The maximum amount of compensation will remain uncapped.
Although an insurer failing is a relatively rare event, the development that the maximum compensation will be increased, should an Annuity provider fail, is welcome news at a time when Annuities are being demonised by some parts of the financial press.
