A spokesperson for the FSCS said the increase was due to a rise in SIPP claims, and it would levy the pensions intermediation sector to compensate the costs for the claims. The annual levy for investment advisers for the year ahead has decreased by £9m, from £125m to £116m. The FSCS states that this is due to a reduction in costs relating to investment defaults.

In February, the FSCS moved to significantly raise how much is paid out for SIPP claims, altering its provisions to base payouts on the value of investments. Previously, the FSCS would only pay out on lost pension growth and charges taken from a SIPP; now, the FSCS pays out based on the value of the investment instead.

So what does the news mean for consumers? Adrian Walker of Old Mutual believes the new costs threaten pension advice, and is “not a desirable outcome” for retirees present and future. “Since the introduction of new pension reforms in April, advising on retirement has become far more complex,” Walker notes. “The changes introduce longevity and investment risk for customers, which is best managed with the help of a qualified adviser.”

“The increased range of opportunities available also means that giving retirement advice is more labour intensive than ever before. Today’s FSCS levy creates an additional cost for those advisers. It is obvious that the economics of giving at-retirement advice are becoming more and more challenging, and there is a risk advisers may not be able to offer their support to every client they hope to give advice to.”

“The Government’s Pension Wise service will go some way to supporting customers but finding ways to make advice more accessible is key to the long-term financial future of the UK’s pension savers.”