27 February 2008
Billions of pounds of self-invested personal pension (Sipp)
retirement savings could be being invested into underperforming
insurance funds with poor returns compared to other investments.
Despite recent surges in the sale of Sipps, industry figures
suggest that more than 90% of the money going into insurance
company Sipps is being invested into the same funds available in
less expensive products.
In some cases Sipp policyholders are forced to keep a large
proportion of their pension savings in insurance company funds if
they want to invest more widely. Some pension providers are blaming
the rules set by the Financial Services Authority (FSA) but the FSA
denies the existence of any such rules. The FSA has said: "With
regard to FSA rules around the minimum amount that needs to be
invested, this is not a requirement of any FSA rules. This is a
commercial decision for the provider as to whether they insist on
any share of the funds being invested in their products."
