Silly SIPP mistake

simo73

Hi I had two small pensions worth around £30000 which when you did the maths were performing pretty terrible so I started looking round at
other options with no plan in mind and if I am honest no idea.After a few internet searches and maybe leaving details here and there I was contacted by telephone from somebody (a introducer) offering me a SIPP investment in Storefirst store pods with 8% guaranteed for the first 2 years and the first year paid directly to me into my bank account.I did a little research and liked the look of the investment at least it was in uk and I owned the store pod so started to proceed and transferred personal pensions into one Sipp but then received a call from the Introducer saying the investment was off (something to do with storefirst and SFA apparently) and he had a new investment in Australian farmland for me With a company called GAS Verdant I have done a little research and it looks like a real investment with farm report etc but can find out little about GAS Verdant.He also said his firm would honour the 8% I was missing out on from the Store first investment but the scary thing is it would have to be wired to somebody elses bank account not in my name.All this has put me off at first the agents (introducer) company seemed very professional sorted out paperwork,sipp etc and even used courier service to collect paperwork at their cost. Now I am stuck with a sipp I dont know how to use and not sure what to do next. On the plus side I have only lost the sipp set up fee so far. Any views on what I could do next anyone?. What about putting money in a deposit account through the sipp?. Thanks for reading.

Linton

First advice - do not go anywhere near any of these unregulated get-rich-quick non-standard investments. They are any or all of illegal, extremely high risk, and scams. They will certainly make someone rich, but it wont be you. I guess by SFA you mean FSA - they are the people who monitor/regulate financial services and close down anything failing to follow the rules.

Assuming you have many years until you retire you should be looking for a sensible range of equity based funds. If you dont have the knowledge or skills to choose these go to an IFA. It seems to me that a SIPP is too sophisticated and therefore expensive for what you need. Again an IFA will be able to advise. It may be worthwhile to move your money into a simple private pension.

I dont know over what time scale you assessed your pensions performance. But you need to be aware and accept that equity investments are volatile, values will go up and down. However over a long time period (10, 20 years, certainly more than 5) they have provided the best returns.

You can put your money in a pension cash deposit fund: current expected return is something close to zero, possibly negative. So not a good idea unless you are about to retire.

dunstonh

I was contacted by telephone from somebody (a introducer) offering me a SIPP investment in Storefirst store pods with 8% guaranteed for the first 2 years and the first year paid directly to me into my bank account.

Unregulated scheme and the payments to you would likely be classed by HMRC as unauthorised payments which would be tax evasion and see you hit with a penalty charge and an excuse for HMRC to investigate your tax position if they wanted to.

These unregulated schemes are mostly scams designed to catch out people that do not know what they are doing. Why do you think they have non-regulated introducers and use unregulated investments? Its because the regulated side wouldnt go near them with a bargepole

simo73

hi again just out of interest the gas verdant Australian farmland investment is on the sippwise website with a diligence report from their managing director claiming it to be a reasonable investment.
They are FSA approved but the investment is not.Does that change anyone's opinion of the investment?.
sippwise.com/verdant-land/

dunstonh

They are FSA approved but the investment is not.Does that change anyone's opinion of the investment?.

No it does not. SIPPS have to be regulated. The investments do not. Nothing has changed.

brianjink82

As mentioned above, there are some scams hidden behind un-regulated investments but most, if SIPP approved are sound investments as long as you are aware of your risk level and how the investments tie in with this. You must be comfortable with teh risk of the product your are investing into. For Linton to say that a SIPP is too sophisticated for you is a stab in the dark. Quite hoesntly, this is not a comment that can just be made. An in depth fact find should be carried out to decide on this. Un-regulated investments are not neccessarily un-regulated because the FSA dis-approve of them, some are structured in other countries or do not fall under the FSA criteria. As such, of course some of these products are likely to be riskier and some are most definitely scams but a good, reputable broker will point you in the right direction. I alos believe Lintons comment on the investment type to suit you another stab in the dark. It's worth noting that volatility in standard pension planning is often not enough to be able to plan your retirement on. It's also worth noting that in line with current inflation, average growth on standard pensions coupled with IFA trail fees and pension management charges, the likeliness is that you will be worse off each year and with £100,000 pension fund offering an average net income of around £450 -£500 per month when you retire, I would assume that you would want a more modern pension plan where you can make decisions (informed of course) and not a fund manager controlling your money. It's also worth noting that the FSA regulation that seems to be treated on here as some sort of rule when making financial decisions is not all it seems, after all Northern Rock was heavily regulated and collapsed and people are still yet to receive any funds from the financial services compensation scheme. I admire the work that the FSA are doing in restricting ucis to retail investors as the products are too complicated however. In summary, choose your investments wisely and choose them on their own merits. Look for an equal balance of risk and reward and choose a risk level that you are comfortable with. Do your due diligence again and again and again. It may be time consuming but worthwhile. Oh, and Simo73, SIPP providers are FSA registered but all products that fall under them are not however; the SIPP providers must do their own due diligence on a product so ask to see a copy and make your won decisions. Lead yourself financially, not emotionally. Last point; the reason the introducer was looking to send the money to somebody else account is so that they are not seen to be enticing you into an investment by way of a promotion. Steer clear of this. It is a dangle of a carrot to try and get you to invest into something that you may not normally invest in. Hope this helps.

dunstonh

For Linton to say that a SIPP is too sophisticated for you is a stab in the dark. Quite hoesntly, this is not a comment that can just be made.

To be fair, the regulator and most in the industry as well as the FOS consider them more suitable for a more knowledgeable consumer.

Un-regulated investments are not neccessarily un-regulated because the FSA dis-approve of them, some are structured in other countries or do not fall under the FSA criteria. As such, of course some of these products are likely to be riskier and some are most definitely scams but a good, reputable broker will point you in the right direction.

The typical UK consumer shouldnt go near unregulated investments. In addition to being unregulated they also lack FSCS protection. It doesnt mean they are unsuitable for experienced investors.

It's worth noting that volatility in standard pension planning is often not enough to be able to plan your retirement on.

Modern pensions can have nearly 30,000 conventional investments available to them on a decent platform. If you can't find suitable investments from that 30,000 then you shouldnt be investing in a SIPP full stop.

It's also worth noting that in line with current inflation, average growth on standard pensions coupled with IFA trail fees and pension management charges, the likeliness is that you will be worse off each year

Rubbish. Plus, if unregulated schemes are used the charges will be largely similar on provider/platform and adviser with only the cost of investment being different.

It's also worth noting that the FSA regulation that seems to be treated on here as some sort of rule when making financial decisions is not all it seems, after all Northern Rock was heavily regulated and collapsed and people are still yet to receive any funds from the financial services compensation scheme.

Now you are getting desperate. That is a bit like saying because a helicopter crashed, you shouldnt buy a car because they are both vehicles and something went wrong with one.

Part of the problem with the FSA is that it micromanaged the adviser sector and ignored the big issues. IFAs have just 1% of complaints at the FOS despite dominating the advice distribution channel. Over 75% of retail pension business is done by IFAs. Most businesses would focus on the problems. The FSA focused on the 1%.

I admire the work that the FSA are doing in restricting ucis to retail investors as the products are too complicated

So, you agree. They are not suited to the average consumer.