The Financial Services Compensation Scheme (FSCS) paid out £405 million across 69,980 customers of defaulted firms last year.
This figure, published in the lifeboat fund’s annual report and accounts today, represents a £30 million increase from 2016/17.
Claims related to Sipps continued to rise, increasing by 7% from £105 million to £112 million across the year.
FSCS chief executive Mark Neale said: ‘Just over a fifth of the claims we handled in 2017/18 arose from pensions advice – mainly relating to the transfer of retirement savings out of an occupational scheme into a SIPP with a view to making illiquid and risky investments.
‘This rising tide of pension-related claims underlines the risks that consumers face as they make increasingly complex choices about financing retirement and, therefore, the importance of raising awareness of FSCS protection outside of deposits.’
Neale also highlighted FSCS research indicating that consumers’ choices about investments for retirement were influenced by knowledge about FSCS protection.
In May, the FSCS announced a £52 million increase to its levy on life and pensions advisers, part of a total levy of £407 million for 2018/19.
From April 1 2019, a series of changes to FSCS funding will come into force, including a 25% contribution from product providers, tighter rules on professional indemnity (PI) insurers, and an increase to the maximum payout for each claim from £50,000 to £85,000.
The FSCS recovered £11 billion from collapsed bank Bradford & Bingley, which was used to pay off a loan from the Treasury and a further £168 million from other estates and from litigation settlements relating to PPI.
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