Pensions 

UK commercial property to be a standard asset

UK commercial property has been added to the standard assets list for Sipps in a policy statement announced by the FCA.

The regulator said bank account deposits, physical gold bullion, National Savings & Investment products, units in regulated collective investment schemes and UK commercial property have all been added to the standard assets list.

The shift represents a major change since the FCA had stated it would be keeping UK commercial property as a non-standard asset in May this year.

In response, the FCA said, “Our experience of Sipp operators that have exited the Sipp market has shown that where non-standard asset types are held within schemes the costs involved in transferring these schemes to another provider can be significantly higher than for schemes containing only standard asset types. We did not receive feedback that persuaded us otherwise.”

The regulator added the significance to many Sipp operators of the addition of UK commercial property has meant it can be a standard asset and can be transferred between pension providers at ease, providing there is a purchasing party prepared to take the asset. And if there is an instance where it is not the case – for example when the property cannot be registered at the Land Registry or would take longer than 30 days to transfer – it would be classified as a non-standard.

The Association of Member-Directed Pension Schemes (Amps) said it “fully accepts” the costs in transferring UK commercial property will be higher than most other investments. With that in mind, the body also said UK commercial property, although complex to administer, has been the backbone of the Sipp industry, with “no major issues over the years”. “It is reassuring that the FCA has recognised this and taken appropriate action to keep it as a standard asset.”

Martin Tilley, director of technical services at Dentons also welcomes the change, although it is not as simple as some other assets. “We could say if you have a bricks and mortar property with no mortgage on it at all, we should be able to transfer it away in 30 days. If it’s got a mortgage on it, it makes it a little more difficult because you can’t transfer a mortgage in specie.”

charlotte.richards@ft.com

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