Two out of five retirement advisers worried SIPP providers won’t be able to meet new capital adequacy requirements

by | Apr 13, 2016

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Latest research suggests that two out of five retirement advisers are worried that SIPP providers will not be able to meet the new capital adequacy requirements which come into effect in September.

The findings come from Momentum Pensions, the international pension specialist and independent pension trustee. The report also revealed that advisers need more clarity on standard and non-standard assets.

The figures revealed that 45% of advisers are concerned about providers meeting the rules. What’s more, 63% of financial advisers want more clarity on non-standard SIPP investment rules from HMRC and the FCA. And, the importance of SIPPs as a planning tool for non-standard pension investments was cited by 33% of respondents. The flexibility to take on non-standard investments was also cited by two out of five advisers as being important to either them or their clients.

Momentum Pensions point out that under the capital adequacy rules, commercial property held in a SIPP is to be classed as a ‘standard asset’. Previously, the regulator had classed commercial property as a ‘non-standard’ asset. Their research further shows that 36% want more clarity on specific property transfer rules.

CEO of Momentum Pensions Stewart Davies said: “The fact that so many advisers are worried about the ability of their SIPP provider to meet September’s capital adequacy requirements is concerning.

“Not only will this impact their confidence in their particular adviser, it will potentially cast a shadow over the entire industry and highlights the need for SIPP providers to work closely with advisers to ensure they have the knowledge and tools available to provide clients with detailed, legislative-secure advice.

“In addition, we will see the issue of non-standard SIPP investments rising in importance over the next few months. Our research clearly shows that advisers need clarity on non-standard investments, and they need it now. With SIPPs being increasingly seen as a vehicle for the planning of non-standard pension investments, this clarity is needed as the industry looks ahead to the introduction of the new capital adequacy rules in September.”

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