The rush to put residential property into self-invested personal pensions following A-Day, as anticipated by the industry, is only likely to attract a specific niche of individuals, new research indicates.
A survey conducted by life company Skandia, questioning 200 financial advisers, finds seven in ten respondents will only consider residential property as a suitable asset class within Sipps for a select group of clients, while only 7% believe it would be suitable for the ‘vast majority’ of clients, with 13% believing it will suit ‘many clients’.
Skandia finds further A-Day changes are likely to increase the popularity of Sipps, with almost all (94%) of respondents believing ‘flexible retirement’ options including those under unsecured pension and alternatively secured pension arrangements will draw their clients attention.
The life insurer points to a lack of confidence in the annuity market, as nine out of ten advisers questioned predict a large portion of this business will be written through Sipps (64%) or multi-manager products (28%).
Moreover, 79% of respondents believe the impending pensions changes at A-Day will boost sales within the market, making them easier to sell, while potentially closing the close the £27bn savings gap, according to Skandia.
Billy Mackey, pensions marketing manager at Skandia, says: “Sipps are very much in vogue at the moment and this research confirms their popularity within the advisory market. It shows that at retirement financial planning is set to be a growth area for advisers after A-day and that Sipps and multi-manager pensions will form a crucial part of this market.”
He says the report indicates advisers have a more realistic perception about the validity of clients holding residential property within Sipps, adding its popularity can only be constituted once the adviser has taken into account and explained to the client the borrowing, benefit-in-kind and tax rules, along with legal ownership and property management implications.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
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