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Warnings over ‘ignored’ SIPP plans

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14/08/2012
A significant numbers of investors are failing to maximise the investment potential of their Self Invested Personal Pensions due to lack of time and expertise, according to Investec.

Research commissioned by Investec Wealth & Investment shows that half of SIPP holders manage their investments either themselves or get their partner to do so.

But when asked how confident they are about achieving maximum returns according to their risk profile, less than a third feel “very confident” that they have the expertise required to manage their pension pots.

Chris Aitken, head of financial planning at Investec Wealth & Investment, said: “Many people set up a SIPP thinking they will have the time and expertise to manage it properly but they realise that theory and reality can be very different. 

“Managing a SIPP properly requires time, expertise and a strong understanding of market risk and appropriate asset allocation. Unfortunately, for many people this is simply too difficult. We’d advise anyone who is concerned about having a ‘Self-Ignored Personal Pension’ to take professional advice.”

When asked to think about their SIPP specifically in connection with recent volatile investment market conditions, only a third said they were “very confident” they had the necessary time and 28% the necessary expertise to ensure their SIPP delivered a strong risk-adjusted performance.

The research from IW&I also found that, of those managing the SIPP themselves, under half 45% actually understand how their charging structures are calculated by their SIPPs provider. According to the study, the vast majority of those self-investing felt that SIPPs providers should simplify their charging structures.

Aitken added: “This is a poor reflection of some SIPP providers and it’s also a call to action for SIPP holders to better understand what they are paying for and whether or not their current plan represents good value and is the right product for them.

“Many Self ‘Ignored’ Personal Pension holders will probably not fully understand the flexibility and power that a SIPP can provide.”

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