The Growth of SIPPS Impacting on UK Pension Schemes

Despite mounting customer complaints and the significant likelihood of market regulation, the UK self-invested personal pension (SIPP) market is projected to grow by 1.9 billion pounds annually until the year 2020.

According to Danielle Cripps, a financial analyst at digital data and analytics firm GlobalData, “the Financial Ombudsman Service's 2017 to 2018 annual review there were 2,051 new complaints made about SIPP’s, which is a 37 per cent rise year-on-year compared to the 1,493 made in the financial year 2016 to 2017.”

"They surround due diligence failings, where customers have been investing in inappropriate nonstandard funds or were mis-sold a SIPP, as well as unregulated firms and introducers. The scandal has also surrounded inappropriately defined benefit transfers."

Cripps believes the increase in the popularity of SIPP’s is in part due to customers wanting to take advantage of the flexibility offered by the new pension freedoms. Savers seek to take advantage of sky-high transfer values, consolidate their pensions and to move their nest eggs into defined contribution schemes and personal pensions in order to access their cash.

This significant inflow of UK pension monies into SIPP’s raises the question of whether it leaves those left in UK Defined Benefit Pension Schemes exposed to potential underfunding.

As this growth in the SIPP market is set to remain strong in size and not showing signs of slowing down in the near future, it is important for those in a defined benefit pension scheme take a monitor their scheme and ensure they are exposed and at risk of their defined benefit scheme is underfunded.

If you are currently in a UK Defined Benefit Pension Scheme and want to transfer your pension into a New Zealand QROPS, contact us by filling out this enquiry form.

Ranfurly Strategic offer a listed Superannuation Scheme as well as an agent that can assist you through the transfer process, prepare transfer forms, and assist in obtaining the required UK and NZ advice that you need.  The Ranfurly Scheme is listed on the UK Government Recognised Pension Schemes List.