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Annuity reforms may see James Hay shut family Sipp

James Hay and IPS Partnership says it will consider closing its family Sipp to new business if Treasury reforms to drawdown rules remove incentives for smaller schemes to take scheme pensions.

However, Axa, Rowanmoor and Hornbuckle Mitchell all say they are committed to retaining their scheme pension offerings.

Details of changes to pension annuitisation rules, including the introduction of a new flexible drawdown regime, will be outlined on December 9.

James Hay and IPS Partnership business development director Richard Mattison (pictured) says scheme pension, a pension pay-able at least annually until the later of a member’s death or the end of a guarantee period, could no longer be viable for smaller schemes if the changes go ahead as planned.

He says: “It is possible that scheme pensions will no longer be a viable option for smaller schemes. If that is the case, the key USP of the family Sipp will no longer exist and we will have to take a view on whether to keep the product open to new business.”

Axa Winterthur head of pensions development Mike Morrison says: “It is possible to underwrite scheme pensions so if people have a shorter than normal life expectancy, they will get a higher amount. I think that scheme pensions become an alternative to new drawdown purely because it may offer the ability to write more than drawdown offers. It is important that consumers have the widest range of choices.”

Rowanmoor Pensions head of pensions technical services Robert Graves says that despite the reforms, the firm’s family Sipp still has other “key advantages” and will be retained.

Hornbuckle Mitchell head of sales Stuart Dick says: “It has never been a mass-market product and never will be but it would be remiss to write it off based on the outcome of December 9.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Dentons will also be retaining our Scheme Pension SIPP options as irresprctive of annuity reform,scheme pension could still offer advantages to some individuals

  2. Hyman Wolanski (MD, Sippchoice) 3rd December 2010 at 9:08 am

    Scheme pensions were never intended for SIPPs and most mainstream SIPP players never got into this area. The James Hay/IPS announcement is a recognition of the reality that scheme pensions for SIPPs are on the way out and will become increasingly problematic for anyone who has been sold a scheme pension and realises that they are trapped into this and can’t switch out to other new options.

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