Scottish Widows has called on the FSA to increase the disclosure requirements for SIPPs after the Government last week gave the go-ahead for protected rights investment in the pension products.
The firm says it is vital clients are made aware of the potential charges involved in switching money into SIPPs, saying they could exceed those for their existing personal or stakeholder pension.
It says the FSA, as part of its current review of personal pensions transfers, should bring the disclosure standard for SIPPs up to the level applied for insured personal pensions.
The Department for Work and Pensions (DWP) last Friday announced all registered pension schemes - including SIPPs - can hold protected rights from October 2008.
“We are concerned that many people could be advised to transfer their protected rights into a SIPP without realising the effect of charges under their new arrangement, which could well be higher than for their existing personal or stakeholder pension,” says Ian Naismith, head of pensions market development at Scottish Widows.
“We believe strongly that all transfers into SIPPs should be accompanied by full disclosure showing the possible pension at retirement and the effect of charges.
“This is particularly important for protected rights where consumers have given up a pension guaranteed by the Government and could see the replacement pension eroded by high charges.”
However, Naismith says the move by the Government is a step in the right direction for pensions investment.
“Scottish Widows welcomes the relaxation of rules on protected rights to allow access through most SIPPs,” he says.
“It is sensible that there should be as few restrictions as possible on how consumers choose to invest their money.”
The decision to allow protected rights investment in SIPPs received a mixed response from advisers and providers last week.
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