Why Your SIPP Savings Are At Risk
The UK SIPP market looks set to change as Barclays Bank readies to swoop on the banking division of Standard Life - which dominates 20% of the SIPP sector and holds £5 billion of savings mainly consisting of SIPP funds.
Both companies are tight-lipped, but the City speculation is that Barclays will take-over soon in a deal worth £200 - £300 million.
Standard Life employs 300 staff in Edinburgh and in 2008 made a profit of £9.5 million.
Barclays is one of the few banks to refuse government aid during the recession and stands outside of any public ownership. The bank is looking at potential targets like Standard Life in the UK and other banks in Europe to pick up on the cheap while they struggle with financial problems.
Recently, Andrew Tully, head of pensions policy at Standard Life, said: “Some of the small SIPP providers are struggling to meet regulatory requirements and we are likely to see some consolidation between providers as a result.”
The Financial Services Authority has recognised this particular problem, and issued a paper this month outlining its dissatisfaction with the way some small SIPP providers treat investors.
Other issues facing SIPP providers are compensation levels for investors if the funds collapse or are victims of fraudsters like the Madoff Ponzi scheme.
An estimated 80,000 people with £22 billion of pension savings could find that their life savings are at risk because the Financial Services Compensation Scheme (FSCS) provides them with less protection than conventional retirement funds if they suffer fraud or insolvency.
Many investors rely on shares, unit trusts, property, bonds and cash to build retirement savings. Only the first £50,000 of cash deposits covered under current compensation rules, and for investments, only up to £48,000 can be reclaimed - which would generate a meagre pension at current annuity rates.
Standard Life, for example, only 40% of SIPP assets have £50,000 compensation protection in insured funds.
Cash in Standard Life SIPP is 11% of the total; 20% is in mutual funds like unit trusts and 29% is held in property and other bank accounts.
Whatever your financial goals or aims, seeking professional highly regulated advice as early as possible from Qrops Adviser, is the first step in securing the best possible life in retirement. Contact us via the contact Qrops Adviser page, call us direct on 0032 (0)2 400 0087 or email us at info@qropsadviser.com.
