One of the main sources of new Sipp business is transfers from defined benefit (DB) pensions, and there is always concern about moving someone from DB to defined contribution (DC) benefits. The difficulty for advisers is categorically showing that either it is better for the client in their particular circumstances to leave the DB scheme, or that the client was insistent even though the adviser was telling them they should stay where they are.
The precarious situation for the British Steel Pension Scheme workers is a case in point as to how complicated it can be for DB scheme members to get the right advice about moving to a different type of pension in a timely fashion. There is a looming deadline for the paperwork to be completed to allow scheme members to transfer out, yet advisers say itcan take as long as four weeks to fully go through all of the ramifications and paperwork with their clients. It is little wonder the British Steel workers are struggling to get the help they need.
A fear of the regulator also plays a big part in this, and there is no doubt it will come down with an iron fist on advisers who make a mistake. That is how it should be, but there is also a danger that consumers are missing out on advice because the advisers are too concerned about getting it wrong and ending up in hot water. It is a Catch-22 for the advisers.
John Moret, the ‘father of Sipps’ has suggested the number of mis-selling claims is set to escalate in the coming years, creating a sense of even greater foreboding. But for many people, Sipps are a good product and it would be a shame for them to lose traction out of fear for their use.
Alison Steed is a freelance journalist