Warning re Stakeholders/Personal Pension vs SIPPS

EdInvestor

The Revenue has okayed this, but only if you revoke the right to use the accommodation yourself, which might put a few people off.

Sunday Times

cheerfulcat

dunstonh wrote:

This is why Gordon Brown was right to remove property and other tangible assets from being allowed in SIPPs and why regulation of the SIPP wrapper is required.

I must have missed something, dh; why was it right not to allow property or tangible assets in SIPPs and how does this story prove that point? Not having a go, this is a genuine question.

dunstonh

I must have missed something, dh; why was it right not to allow property or tangible assets in SIPPs and how does this story prove that point? Not having a go, this is a genuine question.

Because you have people who know nothing of pensions being able to sell a pension wrapper with no consumer protection.

This time last year you had builders advertising that people could buy their home with their pension money. Gibbs (the stamp people) encouraging average consumers to buy stamps for the SIPPs. The whole thing was a total mess. The rumours are that other assets, such as property, could come back into play after regulation and that they were removed because of the way they were being marketed.

In this case, you have a bunch of solicitors acting on legislation which doesn't. Whilst the revenue appear to have agreed it (according to Eds article linked), the article reporting it in Pensions Management has people quoted as saying that the still expect that loophole to be closed before the finance act.

So, you have an unregulated financial services product being sold by people outside of the financial services based on legislation that doesn't come in until July and can be altered before that point (and its not as if it isn't likely to change. The removal of property happened without notice). The solicitors in this case ought to be ashamed of themselves. It really seems shoddy that they are allowing people and encouraging people to do this knowing that it is possible that it could all go wrong before the legislation comes in.

If the SIPP was regulated (which it will be soon), then you can open it up to other assets with the knowledge that the people doing it will have to be qualified and authorised.

EdInvestor

Because you have people who know nothing of pensions being able to sell a pension wrapper with no consumer protection.

But this has been the case for many years.Sipps are not new, and there have been quite clear rules about what you can put in them since they started.Commercial property has always been allowed.

The question seems simply to be: "Is a French leaseback apartment qualified as commercial or residential property?"According to the Revenue it's commercial as long as there is no right for the investor and family to make personal use of it.

Does this not seem fairly clear?

One would be a bit more convinced about the regulatory argument if regulation actually stopped misselling, as opposed to enabling you to make a claim if (when?) it happens to you... :rolleyes:

Have you actually noticed that Sipps have been a major cause of cheating and fraud over all the years they have been in existence? I haven't.Compared with regulated pensions, they seem to be clean as a whistle.

dunstonh

Have you actually noticed that Sipps have been a major cause of cheating and fraud over all the years they have been in existence? I haven't.Compared with regulated pensions, they seem to be clean as a whistle.

With the product not being regulated there has been no-one monitoring them. Plus they haven't been priced for the mainstream market until recent times. However, SIPPs have made the FSA warnings list unlike stakeholders and personal pensions and the FSA do see SIPPs as a potential mis-sale area. It also has to be said the sales of stakeholders or personal pensions are almost certainly a much safer and cleaner transaction for all concerned.

The question seems simply to be: "Is a French leaseback apartment qualified as commercial or residential property?"According to the Revenue it's commercial as long as there is no right for the investor and family to make personal use of it.

Does this not seem fairly clear?

No, the question is of ethics and whether someone should be selling this type of investment when it could be outlawed in less than 2 months time and there being no comeback on those that recommended it. Any sensible person would say wait until the finance act is in before you do it.

Its not as if we haven't been there before with a number of people getting ready for property purchase which was pulled at last minute.

One would be a bit more convinced about the regulatory argument if regulation actually stopped misselling, as opposed to enabling you to make a claim if (when?) it happens to you... :rolleyes:

With most mis-selling issues taking place in less regulated times, its not really a valid argument to compare what happened then with what happens now.

whiteflag_3

kittie wrote:

My only regret is entrusting some cash to various `top` fund managers. Three of the funds fell by 13-14%. I have cut my losses in two of them and re-invested the cash in an ishare which is already performing very well. One other high income fund is doing well relative to the market

I thank my lucky stars that I was confident enough to walk away from the IFA

I think an IFA would have advised against investing at the top and then selling at the at the bottom.

He/she would have explained that investing in funds should be for the long term and paper losses and gains are just that, only when you crystalize do real losses occur!

EdInvestor

He/she would have explained that investing in funds should be for the long term and paper losses and gains are just that, only when you crystalize do real losses occur!

Yes well.To my mind this is a judgement call which will depend on individual circumstances.

For instance anyone who had been put into technology funds at the millenium would still be very heavily underwater.

How long do you wait? Most of these funds will never recover.And this ought to have been apparent a few years ago.

The FTSE-1000 is still not back to its peak after six years.The tracker funds are only in postive territory because of the dividends.

All but a very few With-profits funds will never recover because their equity investment portion has halved and the rest of the money is in low return bonds.This is in compliance with a regulatory change and it cannot be altered.

Billions of pounds are in these WP funds which will never recover - there is absolutely no doubt whatsoever about this.

In the absence of any other considerations (such as guarantees) shouldn't advisors be reviewing past sales of these investments and advising people to get out?

[Deleted User]

so whiteflag you now have a crstal ball as well as hindsight!!

My sipp is doing very nicely indeed thank you but of course it does take bottle to cut losses and move onto a profit generator instead

My sipp (mainly HYP) fund is very much intact and is generating £**,000 per year. I am more than happy. The big advantages of having a sipp are the transparency and ability to move quickly. I used both and so my sipp has benefitted. I have sold some funds which underperformed and I have bought into more non-cyclical HYP shares at a good price. Like I said previously, my mistake was to put my trust into fund managers and now I have re-balanced my portflio so that the funds have very little influence

whiteflag_3

kittie wrote:

I have sold some funds which underperformed and I have bought into more non-cyclical HYP shares at a good price

Just out of interest can you explain how these funds had under performed?

Had they underperformed against their benchmark/sector or underperformed against your expectations?

[Deleted User]

Easy whiteflag

They underperformed my HYP portfolio by a long way