What is a SIPP?
A SIPP or Self Invested Personal Pension, is a do-it-yourself pension that gives you freedom and flexibility as to how your pension is invested. You can put your money in a wide range of assets including property and Unregulated Collective Investment Schemes (UCIS). Your investment is held in the Pension wrapper until retirement, at which time it can be turned into income.
in 2020, it was estimated that savers owned around 2m SIPP products containing assets of approximately £180bn.
Many SIPPs are beneficial for investors but do come with risks and they are not suitable for everyone.
The Financial Conduct Authority (FCA) has identified ‘serious and ongoing failings’ by both Individual Financial Advisers (IFAs) and SIPP Providers. Typically, mis-selling is related to the “wrong” type of investor being given poor or misleading advice as to what investments were relatively safe and right for them.
A lot of advisers have advised customer’s to transfer their existing pension into a SIPP so that it could then be invested into unregulated high risk, dubious or inappropriate investment schemes that failed spectacularly, sometimes resulting in whole savings being wiped out.
Examples of SIPP investments include:
- overseas investments
- hotels and holiday properties
- green energy
- biofuels and environmental projects
When making the recommendation the financial advisor should first conduct checks to see that the underlying investment best matches the client’s needs and objectives. Such checks are frequently not done to the standard required, exposing some customer’s pensions to financial harm and in some cases, criminal activity.