A total of 14 per cent of self-invested personal pension (Sipp) providers automatically moved their clients drawing 100 per cent of Gad to the new 120 per cent limit when the regulations changed, Money Management research reveals.
In the latest income drawdown survey, seven providers out of 59 respondents said they took this approach when the maximum allowable changed on 26 March 2013.
According to the data, the full list of providers who implemented the strategy is:
• Axa Wealth Retirement Wealth Account
• Chase de Vere IFA
• DP Pensions
• Killik & Co Sipp
• Skandia MultiFunds
Axa, LV=, and Prudential all said they informed their clients and gave them the choice to opt out of the automatic increase. Chase de Vere implemented the change in May 2013 rather than on the date of legislation change and contacted its customers regarding their options.
The survey showed that the remainder either contacted customers regarding their options or took no action, with information to be provided at review.
The approach taken by Sipp providers toward clients drawing the maximum has split opinion across the industry. Some providers took the view that, if a client has selected to draw the ‘maximum’, uplifting them to 120 per cent when it became available was the right approach.
Others said no change should be made without the client’s express permission. Brian Davidson, platform proposition manager at Alliance Trust Savings, said since income is taxed, his firm felt it was better for advisers and clients to make a conscious decision to take a higher level of income than make any assumptions.