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Jacobs brands deferred Sipps as marketing ploys

The best deferred Sipp is a stakeholder pension and the current spate of deferred Sipp launches are just marketing ploys, says pension specialist Richard Jacobs.

Jacobs, director of Richard Jacobs Pension & Trustee Services, says Standard Life and Legal & General’s forthcoming individual deferred Sipp laun-ches offer little more than stakeholder for the majority of clients but have higher charges than some other stakeholder contracts in the market.

He recommends that clients with low contribution levels or starting with small pen- sion pots invest in a low-cost stakeholder plan and can always switch into a full Sipp – which will incur no transfer penalty – when they have sufficient assets to consider self-investment.

Standard managing director (marketing) Simon Douglas says the firm’s deferred Sipp will have a stakeholder-equivalent charging structure while being used as a personal pension but concedes there may be slightly lower cost alternatives. But the simplicity of having a single contract is attractive to clients, he says.

L&G retirement income director Tony Filbin says the firm’s product also has stakeholder-equivalent charging and only has an annual fee of 0.9 per cent on pension pots over 15,000.

Jacobs says: “The best def-erred Sipps are stakeholder pensions. If you do a stake-holder with no penalty for transferring out later, then this is effectively a deferred Sipp with the hype.”

Douglas says: “Provided the underlying contract is a competitive one, it makes sense to have that single contract and avoid the hassle of a pension transfer later.”


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