In-specie limbo
Table 4 shows the charges levied by providers. A recent development on this front emerged from the FCA’s review of the platform space – the regulator announced in March that it is looking to ban or cap exit fees on investment platforms. As the table shows, this is unlikely to cause much disruption to the platform Sipp market, as many providers do not charge for money transferred out.
The situation for other types of transfer have also been causing some commotion of late. In October, HMRC blocked tax-relief on in-specie transfers – where assets are moved into the Sipp instead of cash – for 26 firms. One of the companies in question, Sippchoice, challenged the ruling and was victorious, but HMRC has subsequently won its right to an appeal. A date for that hearing has now been pencilled in for mid-May. But in the meantime, providers who have stopped accepting such transfers in the interim are still in limbo.
Robert Graves, head of pensions technical services at Embark Group, outlines his concerns: “While it is evident that there could be potential for abuse of the contribution tax relief system where assets involved are difficult to value, it is disappointing that a way has not been found to reopen the facility for assets that can be readily and accurately valued.
“The main losers are clients who now must go through the process of selling the asset, contributing a cash sum and then repurchasing the asset via their Sipp. This introduces additional costs and risk of loss while being out of the investment market.”
Charges, on the whole, have seen little change since the last survey. Providers generally review fees on an annual basis, and this normally results in small, incremental rises to cover inflation. Dentons is a case in point, with its maximum annual fee increased from £552 to £570.
Look to Table 5for plan details. Schemes are classified as either open-architecture or platform. Interestingly, no plans have a discretionary fund manager-only offering this time around, down from two products six months ago.
Pension freedoms have had a significant affect on the Sipp market, although as Table A shows, the proportion of book lost as result has been negligible in all cases. But the market still needs to adapt, according to John Dowding, technical director at Morgan Lloyd.
“There is clearly a need for product innovation to address the continuing demand for drawdown, not least in the area of hybrid income options, better investment modelling and greater online functionality. Consumers can look forward to more of these innovations.”
