In its annual review published this week, The Pensions Advisory Service says overall complaints rose to 7,746 for the year ending March 2009 compared with 7,026 in the previous 12 months. It says the number of complaints and enquiries specifically relating to Sipps leapt to 1,024 from 540 in the previous year.
The biggest cause of the rise in overall complaints is poor administration with increases in delays and mistakes contributing heavily to the figures. The majority of the complaints concern individual pension plans.
TPAS says that a number of enquiries from people with Sipps reveals that some had clearly not understood the level of personal responsibility taken on, indicating that the product may not have been appropriate.
Chief executive Malcolm McLean says: “There has certainly been an increase in the number of calls in relation to Sipps. People who invest in Sipps, we have always said, ought to be reasonably sophisticated investors. The value of a Sipp is to take advantage of the flexibility and other things that it offers and if the customer does not need that or does not want it they probably should not be in a Sipp.”
He is concerned about clients paying extra charges for benefits that they are not even aware of.
McLean says there have been thousands of calls from people concerned about how the downturn in the stockmarket has affected their pensions and some did not even realise that their pensions were invested in the stockmarket.
The report also notes a large number of complaints about insurers’ administration, particularly problems following insurance company mergers and takeovers.
Hargreaves Lansdown pensions analyst Laith Khalaf says: “If the clients in Sipps are paying lower charges than they would if they were in an all-star personal pension and are not using the wider investment options, then that is not a problem but if they are paying higher charges, then they should not be in there.”