Zopa has confirmed it is in progressive talks with a number of specialist Self Invested Pension Providers to allow ‘social lending' to become an acceptable asset class for a pension.
The company is an online marketplace where people meet to lend and borrow money, also known as “ebay for money”, and it says the potential deal with Sipp providers would see the launch of a new asset class which would benefit from pension tax relief while receiving average returns of between 6.75% and 14% per year.
This latest move follows Zopa’s announcement last week outlining its intention to try and target the intermediary market by offering IFAs who introduce a 'lender' to Zopa 0.2% commission of all the money lent by that client, along with a minimum £50 commission payment for each client.
And Zopa, which stands for Zone of Possible Agreement, says as most people use IFAs when taking out and running their Sipp, the two campaigns will work together to broaden consumer awareness while providing ease of access to Zopa lending for clients through the Sipp route.
The company confirms it is currently in the later stages of agreeing operational details with a number of specialist SIPP providers who are keen to accept Zopa lending as a new asset class within their offering.
Under the deal Zopa says members will lend money from their Sipp to Zopa, which spreads the risk across a number of people, then once the money has been lent monthly interest payments will be paid directly into the Sipp via the product’s trustees.
As a result its says the Sipp deal will make lending at Zopa an extremely effective way to build up a retirement fund, while providing an attractive proposition for those over 55 who want to drawdown their pension assets to provide an income, but need good returns from a low risk asset.
James Alexander, co-founder and chief executive of Zopa, says given the increasing enthusiasm consumers are showing for access to the alternative assets which can be held in a Sipp, this development is extremely significant.
He adds: “Once more people get to see just how attractive the returns from Zopa lending are – and with very low levels of risk, this news will be of great interest to people saving for their retirement, their advisers and indeed all Sipp providers.”
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