More than half of Sipp clients do not understand charges

More than half of savers with a self-invested personal pension do not understand how their charges are calculated by their product provider, according to a new consumer study conducted by Investec Wealth and Investment.

The survey, which gathered responses from around 1,300 people, found that 45 per cent of Sipp clients said they understood how their charges were calculated by their provider, leaving a majority of 55 per cent who were not clear on the process.

Some 70 per cent of those questioned said that providers should simplify their charging structures as a result of confusion.

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Investec said the study also showed that Sipp investors lack the time and expertise necessary to maximise the investment potential of their pensions, with only 28 per cent stating they have the expertise to properly manage their investments despite 50 per cent actually doing so currently.

As a result of a lack of expertise and a lack of time - less than 40 per cent said they were “very confident” they have the time to manage investments properly - 15 per cent of people managing their Sipp are likely to appoint an investment professional to do so within the next 12 months.

Chris Aitken, head of financial planning at Investec, said: “Many people set up a Sipp thinking they will have the time and expertise to manage it properly but they realise that theory and reality can be very different.

“Managing a Sipp properly requires time, expertise and a strong understanding of market risk and appropriate asset allocation. Unfortunately, for many people this is simply too difficult.”