‘Many Sipp customers using wrong product’

According to Skandia’s fourth quarter Adviser Confidence Barometer survey, most savers would be better off with a platform pension than a Sipp – and their advisers agree.

Sipps cost more than platform pensions because they can offer a wider investment choice and more flexibility.

However Skandia’s research found that most people who have Sipps do not make enough use of these perks to justify the extra costs.

The survey found 70 per cent of investors who have Sipps do not use them to invest in exchange-traded funds and nearly half do not invest in direct equities.

It also revealed that 20 per cent of people with Sipps have more than 90 per cent of their assets in a unit trust or open-ended investment company, and 46 per cent of advisers believed that just 10 per cent of their customers would be better off with a Sipp.

Nick Dixon, marketing director for Skandia, said the research proves that Sipps are being used unnecessarily, and that platform pensions may be a better, more cost-effective option.

He added: “Since the introduction of Sipps, their popularity has grown and they are are sometimes seen as the only pension worth having. This is not in the best interests of the majority of people and there is a danger that many Sipp customers are using the wrong product.

“As platform pensions continue to evolve, we expect platform pensions to increasingly replace the need for Sipps.”

Steven Robinson, managing director of Bristol-based Clarke Robinson & Company, said: “I agree. It is pointless having a Sipp if clients are only going into a few collectives.”