However, the new Sipp rules have created an additional challenge for the operators, with many choosing to restrict the investments that they will accept, or requiring additional capital in order to meet adequacy requirements from September 2016. To ensure they are selecting the right provider for the future, advisers and investors must be prepared to ask simple, precise questions to their Sipp operators about what their plans are for the future, for the investments they will continue to allow, and their financial strength. Ultimately, a higher quality, safer, more resilient Sipp market should emerge for both advisers and investors.
The new pension rules will gradually change many savers’ perspectives on what a pension means for them and how it can be used. Providers will need to respond to customer expectations for more versatility and accessibility, in order to allow greater investment control and more useful ways to take money out of pensions.
The majority of Sipp operators have a proven track record in responding to change and have continued to deliver drawdown in all its forms since it was first introduced. They have had to implement the variations in the Government Actuary’s Department (Gad) limits, as well as changing from the unsecured/alternatively secured world to capped and flexible drawdown. The challenges facing the wider pensions market are not so straightforward, coming from accumulation-focused propositions.
The most recent changes are unlikely to be the last. For the majority of savers, pensions represent either their largest asset, or second largest after their home. Savers will be keen on choosing a solution which will continue to offer them the greatest opportunity to adapt, both to their own changing needs, and to whatever direction pensions follow in the future.
Paul Evans is pension technical manager at Suffolk Life
