Insurance companies highlight risks of SIPPS |
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Tue, 27 Sep 2005 06:05
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LONDON: Several insurance companies are seeking dialogue with the Financial Services Authority on the risks of the proposed pension investment scheme mooted by the government. Companies like Standard Life and Norwich Union feel the new rules mean that those selling assets under the self-invested personal pension schemes (SIPPS) are not regulated and as such they can employ all mis-selling claims.
The insurers want new regulations on advertising and publicity for the pension investments. The insurers are enjoying substantial business as several investors are planning to take advantage of the proposed scheme. Standard Life had got investments worth 1 billion pounds in these new schemes in a month.
But the insurers are of the view that the new scheme is of benefit to high-tax-rate investors. But those who invest in these schemes must also know the risks involved. The investors could lose their homes, if they do not invest wisely and retirees may end up paying huge tax arrears on overseas property investments.
Norwich Union said investors could be carried away by the advertising and chances are they will either lose their pensions or their homes.
Under the proposed scheme, people can use their pension funds to invest in property from next April. But the whole scenario is totally unregulated, which means anyone can sell a Sipp and there is no automatic comeback for investors if something goes wrong.
FSA has indicated that it would like to widen the range of firms allowed to set up and run a personal pension. It is possible that the regulator may ultimately take up policing the scheme. It, however, said the scheme at the moment is unregulated and there is no need for an authorisation to sell or advise on the scheme.
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