Restoring confidence in Sipps and pensions
With life expectancy in the UK rising, the chancellor’s recent proposal to link the state pension age to life expectancy highlights the importance of people making their own provisions for retirement.
The world of personal pensions is constantly evolving so it is essential that providers and advisers make people aware of the savings opportunities available to them, and work to ensure that they feel confident about the investments they are making.
The Sipp market is a great example. Traditionally, personal pensions and Sipps were viewed as two separate ends of the spectrum, but the boundaries have blurred since the emergence of wraps and platforms. A three-tier structure of Sipps has developed and this has resulted in some within the industry challenging whether these products are ‘true’ Sipps.
However it is important that the industry does not become pre-occupied with the name we give products. When considering a retirement savings product the important aspects for most people are whether they are comfortable with how the product works, whether it suits their needs, and how much it will cost, not what the product is called.
Sipps, as with other retirement savings products, are tax-efficient pension and savings vehicles that will be a good choice for many people. But they are attracting a lot of attention at the moment – much of it from the regulator – raising concerns that could undermine people’s confidence in Sipps and cause further damage to the wider reputation of pensions.
It is essential that everyone involved in the development, marketing and administration of these products works together to build consumer confidence. Providing greater transparency around Sipp charges and the risks associated with some Sipp investments is critical.