A product claiming to be the world’s first peer-to-peer pension hopes to encourage more people to save towards their retirement.
The Abundance Pension is the latest example of the growing P2P finance sector which allows people to circumvent ‘traditional’ financial institutions.
Operating as a Sipp, the pension will allow investors to include all of Abundance’s existing and future projects, which are offered to investors through tradeable debentures from individual UK PLCs producing renewable energy.
Bruce Davis, co-founder of Abundance, said: “We hope that this new product’s unique combination of tax relief, the diversified and uncorrelated nature of our Debentures, and the steady and attractive returns they pay from investments matching our customers’ values will make the product a significant new motivation for many people to save more towards their retirement.
“Finally they will have easy and direct access to choose between diverse investment assets, all with a social or environmental benefit, and all paying consistent, strong and uncorrelated returns within a tax-advantaged pension wrapper.”
Figures from the P2P Finance Association showed more than £500m of new consumer and small business loans had been provided by peer-to-peer platforms between April and July.
Cumulative lending by the association’s members stood at more than £3.15bn.
In April 2016 the government will introduce an Innovative Finance Isa for loans arranged via a P2P platform.
The Abundance Pension, which Mr Davis said his company would also offer, is subject to a management charge of 0.3 per cent and a minimum investment of £5,000 in the first year.
It is being offered through a partnership with European Pensions Management which is the scheme trustee and administrator.
Murray Smith, a director at Leicester-based Mattioli Woods said his company already offers its own P2P products in Sipps but admitted the rest of the industry has been cautious.
He said: “The reason it is not gaining traction in the Sipp market is do to with the capital adequacy requirements.
“P2P is not a mainsteam asset and not an asset which can be liquidated easily so as a result your capital requirement will be higher.”
Adviser view
Dennis Hall, chief executive of London-based Yellow Tail Financial Planning, said: “I think P2P finance is worth a look at because if you don’t your clients will because it is probably the fastest growing area in lending.
“We will have to see if mainsteam Sipp providers will open up their books to it but it seems a shame you have to have new Sipp just so you can hold P2P products.”
