SIPPS – Growing in popularity but more could be done to increase awareness

The popularity of SIPPs as the personal pension of choice for the mass affluent is rising, but many advisers feel that there is more to be done to raise awareness of A-Day and the opportunities brought with it, according to a survey from Fidelity FundsNetwork.

Findings from the research conducted with advisers across the UK reveal that nearly one third (29 per cent) believe that SIPPs are becoming the personal pension of choice for the mass affluent. However, less than half of the advisers questioned felt that investors were aware of benefits such as the improved contribution limits and increased flexibility for income drawdown that the advent of A-Day brought with it.

While almost a quarter (22 per cent) of advisers felt there was little awareness among investors about the opportunities now open to them, over a third (34 per cent) were more positive – stating that their clients were keen to find out more once they understood the potential.

David Dalton-Brown, Head of FundsNetwork said: “A-Day brought significant positive changes both in the form of increased contribution limits, and increased control of how benefits can be taken. But while we’ve seen the take-up of SIPPs more than double over the last year, there could still be a large proportion of people who aren’t making full use of the additional benefits that SIPPs now offer – particularly higher rate tax payers.

“Pensions always offered tax breaks on contributions and on the growth within the fund – fundamentally none of that has changed - but the previous disincentives have largely been addressed post A-Day with improved contribution limits and enhanced flexibility on uplifting benefits. Now, for many, pensions have become a lot more attractive.

“There are currently around 3.25 million high rate taxpayers currently in the UK who pay around £69 billion in tax. After all of the hype surrounding A-Day, it is a shame to think that some investors could be missing out on this opportunity due to lack of awareness and education.”