PensionsApr 7 2015

P2P lender confirms Sipp double distribution deal

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P2P lender confirms Sipp double distribution deal

RateSetter has launched into the retirement savings market with self-invested pension providers London and Colonial and European Pensions Management, enabling Sipp holders to lend within their pension tax wrapper.

The distribution agreements will enable pension holders to diversify their portfolios to capture the income available from peer to peer lending.

The Sipp launch was first revealed by FTAdviser back at the start of the year, with business development manager Ceri Williams explaining in March that they were ironing out issues to prevent lending to ‘connected parties’, such as family members, as well as ensuring segregating bank accounts.

Rhydian Lewis, RateSetter’s founder and chief executive, said that there is an overlap between their customer base and those likely to invest via a pension – over 19 per cent of its lenders are in retirement age – and a lot of them have Sipps.

Adam Wrench, head of product at London and Colonial, commented that with the recent changes to the pension landscape and the new flexibility being afforded to Sipps and drawdown contracts, the hunt for high yielding income returns to back drawdown arrangements is on.

“We see P2P lending as playing an ever increasing role as the pension market moves away from traditional conventional annuity options.”

Francis Moore, chairman of European Pensions Management, noted that with any investment there are risks, but P2P lending adds to the options that a Sipp member might include in a diversified portfolio, adding that he welcomed the safety net that RateSetter has created to manage loan interest and capital defaults.

P2P lending through Sipps was previously restricted by rules which required providers to hold higher levels of capital for non-traditional investments, leaving only small self-administered schemes.

However, the pension changes announced in last year’s Budget are forcing firms to offer a wider array of income options to clients who are no longer restricted in when or how they access their pension.

peter.walker@ft.com