30 September 2008
The Financial Services Authority (FSA) has set out its
expectation that firms give suitable advice to help customers make
informed decisions about transferring built-up National Insurance
rebates into Self-Invested Personal Pensions (SIPP).
From 1 October this year, people will be able to contract out of
the State Second Pension into a SIPP and transfer existing National
Insurance rebates ("protected rights") from a personal
pension/stakeholder pension into a SIPP. As with all advised
transactions, the FSA expects firms to ensure that any advice
around these decisions is suitable and based on an assessment of
customer need in order to help consumers make decisions that are
right for them.
This would include determining whether there is a genuine need
for the investment flexibility and control associated with a SIPP,
a clear explanation of the costs involved, and how the
recommendation meets a customer's needs and attitude to risk.
The FSA has published a policy statement confirming that when
advising on contracting out into a SIPP, firms will also need to
provide a comparison of projected retirement from the SIPP versus
potential benefits from the State Second Pension. This requirement
already exists in relation to contracting out into ordinary
personal pensions/stakeholder pensions.
