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December 10, 2007

Sipps providers evade freedom of choice

by Gill Montia

Story link: Sipps providers evade freedom of choice

Fidelity FundsNetwork, the investment website, is suggesting that some self-invested personal pensions (Sipps) are requiring policyholders to make minimum investments into insured funds.

Using figures from Defaqto, which provides research services to financial professionals, Fidelity has calculated that 14% of the 72 Sipp providers listed have a contract that demands a minimum investment into the company’s insurance scheme.

Sipps are designed to give wide investment choice and contracts requiring payments into an insurance scheme are therefore not providing that freedom of choice.

According to David Dalton-Brown, head of Fidelity FundsNetwork, while pension choices are increasing, investors are not reaping the full benefits that a truly open Sipp can offer.

In addition, Defaqto has pointed out that almost 50% of Sipps providers “offer a defined link to fund platforms in their propositions to aid mutual fund trading”.

According to Matt Ward, Defaqto’s principle consultant, this indicates a trend towards packaged propositions and away from the fully flexible spirit of the Sipp.

Further pension news comes from Paternoster, which is in the process of acquiring the £150m pension scheme of Lasmo, the UK oil exploration company.

The move could mark the start of a number of similar acquisitions, as companies are increasingly eager to offload expensive final salary schemes.

 

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