Pension freedoms bringing Sipps to the fore

Pension freedoms bringing Sipps to the fore

Pension freedoms have been driving more people towards self-invested personal pensions and small, self-administered schemes.

Jeff Steedman, head of Sipp/Ssas business development for provider Xafinity, told FTAdviser that his firm had seen an increase in business.

He said final salary transfers into Sipps and Ssas have risen, adding: “These are often high-value pensions and therefore people with them are attracted to Sipps that have more investment freedom.

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“Also, company directors are now more interested in pensions, as having looked at auto-enrolment for their own employees, they’ve also been looking at their own pension plans and putting in large contributions.”

Mr Steedman added that more than 90 per cent of Xafinity’s Sipps have financial advisers, and these clients were “constantly being advised” regularly and so were being kept up to date with changes, such as the reduction in the Lifetime Allowance to £1m.

However, he warned: “Ssas have much older schemes which let their advisers go a long while ago, so they are not getting advice as much, but we always encourage them to re-engage with their advisers before they make any decisions at retirement and in the build up to retirement.”



Tax is a big issue for both advisers and their clients, Mr Steedman said. He said: “It is interesting that the LTA is being reduced to £1m. Perhaps at some point in the future the Chancellor will raise the [LTA] again.

“They are now restricting contributions on the way in to £40,000 and this has been the case for three years now, so they will have to release it at the top, because successful savers are almost going to be taxed more.”

There has also been consolidation of pension post post-freedom, which could allow more people to put £100,000 worth of several combined, smaller pots into a Sipp, rather than the average £250,000 that is put into a Sipp by wealthier company directors, for example.

As for the future - while everyone is talking about pensions and accessing them has become more flexible since the government’s 2015 changes - Mr Steedman pleaded for a period where there is “no pensions tinkering” by parliament.