PensionsNov 19 2015

Quarter of IFAs use Sipp for business succession

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Quarter of IFAs use Sipp for business succession

A poll of financial advisers carried out by Xafinity shows 26 per cent are already use a Sipp as a business succession planning tool, and this number is likely to grow significantly.

The research amongst 130 specialist pension advisers reported that the overwhelming majority would now consider using a Sipp as a business succession planning tool with 14 per cent extremely likely to.

A total of 51 per cent said they are likely to recommend a Sipp for business succession planning and just 8 per cent said they were unlikely to push the pension wrapper for this purpose.

When asked if advisers would consider recommending an in specie property contribution to a Sipp for a client 43 per cent said they would when the situation arises where they would be confident that they could recommend this.

A total of 55 per cent said they might recommend an in specie property contribution but that they would need Sipp provider support to go ahead and just 2 per cent said were unlikely to ever recommend this.

Jeff Steedman, head of Sipp and Ssas business development at Xafinity, said: “Every day we are approached by financial advisers asking about putting commercial properties into Sipps, so clearly there is an appetite out there for the product.

“In specie transfers is another topic that advisers want to find out more about and this seems to be driven by a growing dissatisfaction with their existing Sipp providers.

“My general observation, though, is that many advisers still lack complete confidence in recommending Sipps.

“The same is also true of Ssas. Much of this is due to not having the comprehensive knowledge that they do of some simpler pension products.”

Daren O’Brien, director at Aurora Financial Solutions, said the firm does not use Sipps for business succession purposes and this stance is not likely to change in the future.

He said: “It is really because of the complexity around it. Family Sipps never worked that well in my opinion and there are problems with HMRC - they always seemed a bit close to the mark.”