Does the FSCS protect my pension?

Pensions can be protected by the FSCS, and that includes the PensionBee pension. So, your retirement savings are covered by the scheme if you save with us. 

However, the FSCS doesn’t protect all types of pensions. The main exclusion is defined benefit (also known as ‘final salary’) pensions. These are covered by the Pension Protection Fund (PPF) instead.

Read our pages explaining what defined contribution or defined benefit pensions are to help you work out which type you have. If you’re still not sure, contact your provider or speak to your employer.

The FSCS also offers a Pension Protection Checker. This helpful tool lets you see what sort of protection you might have under the scheme, depending on your pension type.

When does FSCS compensation kick in?

There are many different organisations involved in financial regulation. As a result, it’s not always obvious who to turn to when something goes wrong. 

The FSCS follows rules set for it by the regulators. These are the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). 

The FSCS can only step in and look at a claim for compensation if:

• the provider or adviser you’re claiming against is in default. This means it’s gone out of business and has no way of paying any claims itself. You can view firms that have been declared as failed, or are under investigation, on the FSCS website;
• the FCA authorised the provider or adviser at the time you dealt with it, and the product or service you used was regulated; or
• you received bad (or ‘unsuitable’) pension advice from a regulated financial adviser. That advice might be negligent, misleading, or inappropriate for your personal circumstances and risk tolerance.

You might think you can turn to the FSCS after you’ve moved your pension and lost money. However, the scheme can usually only step in where a saver has received bad advice to switch, rather than making their own decision.

The FSCS can also only pay back money that you’ve lost as a result of failings by that firm. It can’t compensate you for other things - for example, any inconvenience you’ve suffered, or if you’ve made lower-than-expected investment returns.

Please note that the FSCS may require you to first lodge a complaint against a different firm  that has a financial interest in your case. They’ll usually tell you if this applies to you.

It’s always free to claim with the FSCS. Check its website for full details about eligibility. 

Is there a limit to FSCS compensation?

Yes, and the FSCS pension compensation limit varies for each product. 

Check the FSCS website for details of the compensation limits. If you’re still not sure, speak to your provider about the FSCS protection that could apply if something goes wrong. 

The FSCS offers a list of questions to ask your provider so you can find out what sort of protection you have.

Below is a brief look at the FSCS protection for pensions.

Failed pension providers

Some pension products are protected up to 100% of their value if the provider fails. That’s because products of this type are classed as long-term insurance contracts.

Failed SIPP operators

For SIPP operators, this limit is up to £85,000 per eligible person, per firm.

Pension advice

The limit for bad advice is £85,000 per person, per product. 

Of course, you may have more than that saved in your pension. That makes it important to be aware of the limits before you invest based on advice.

Annuities

If you’ve already retired and have an annuity, the FSCS can protect up to 100% of the annuity’s total value. 

For example, imagine that you paid an insurer to give you a guaranteed income of £25,000 per year. If that insurer fails, the FSCS could step in and cover your £25,000 annual income. 

That will last for the term of the annuity. This could be a fixed period or for the rest of of your life, depending on what you agreed when you bought it.

Does PensionBee have any additional protections for my pension?

The PensionBee pension is classed as a long-term insurance contract.

So, if you have a PensionBee plan and its money manager fails, the FSCS could step in and cover 100% of the pension with no upper cap.

Why don’t we offer this protection ourselves?

The FSCS is funded by the financial services industry via an annual levy. Around 50,000 financial firms in the UK, including PensionBee, contribute to the FSCS’s running costs each year. 

It’s important for the FSCS to be independent. It means that if a financial services company goes out of business, the scheme can step in and help as an impartial actor. 

It also ensures that, where you’re due compensation, you’ll usually get your money back sooner. 

If a provider fails, it can take years to sort out. That could leave you caught up in the legal complexities.

By being independent, the FSCS is better positioned to support you if something goes wrong.

Summary

Pensions can be a useful tool for saving for the future. But they can be confusing. So, if you’re not sure what to do with your savings, there are lots of places you can find help. 

You can find free pension guidance online on sites like MoneyHelper, a government-backed service. Or you can explore our Pensions Explained pages, where we cover lots of helpful pension information.

If you need more help and you’re aged 50 or over you’re eligible for a free pension guidance session with Pension Wise, from MoneyHelper. This is also backed by the government.

You can also pay to see an Independent Financial Adviser (IFA). Make sure any adviser you speak to is authorised and regulated to offer advice. You can confirm this by checking the FCA’s register of authorised individuals, firms, and bodies.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Last edited: 22-05-2026