Type: Deferred group self-invested personal pension
Minimum group size: Five
Minimum investment: Lump sum £2,500, monthly £20
Minimum term: None
Investment choice: Insured funds platform ¬ over 90 funds from 17 fund managers, Self-invested options – supermarket option of 997 funds from 43 fund managers, discretionary fund manager service, all other permitted investments including UK commercial property
Allocation rates: 95-100% depending on IFA commission taken
Charges: Bespoke charges applied for each scheme, fund supermarket/access to discretionary fund managers annual £250 if less than £250,000 is invested in insured funds
Commission: Bespoke options including Lautro initial with renewal, establishment with renewal, level, fund-related and nil commission options
This is a group self-invested personal pension plan which allows employees to build up regular contributions in the insured funds platform then move to self-investment when their fund value reaches £50,000. At least £25,000 must stay in the insured funds.
Informed Choice director Martin Bamford believes it is convenient to be able to have protected rights and non-protected rights benefits within the same group policy. “Scottish Equitable has a good reputation for the provision of service in the group pensions market, although I have no personal experience of this. Its processes for establishing and implementing the scheme look well thought through,” he says.
Switching his attention to the less attractive aspects of the product Bamford says: “This isn’t really a group Sipp, more a group personal pension with a self-invested option. If a group personal pension is a collection of personal pensions, then a group Sipp should be a collection of Sipps.”
Bamford also takes issue with the requirement to keep £25,000 invested in insured funds, as he believes this makes the product inflexible and restrictive.
“Within the self-invested segment of the policy the charges look competitive, when taken at face-value, but it is important to remember that these are being subsidised by the funds kept in insured funds. You need to keep over £250,000 in insured funds to wipe out the yearly charge,” he says.
Scanning the market for potential competitors Bamford says: “True group Sipps such as the Pointon York corporate Sipp will provide the main competition. From a cost point of view, the Hargreaves Lansdown vantage group Sipp would probably be hard to beat.
However, Bamford is unsure about the entire concept of a group Sipp. “I would question the suitability of a Sipp product for a typical group scheme. I would prefer to use a GPP and then set up separate Sipps for high earners and sophisticated investors.
“This way you can select the best of both products rather than trying to use a single product to suit all needs,” he says.
He concludes that if advisers are moving to the group Sipp market simply to take advantage of more commission flexibility then employers need to question their motives for moving away from an existing effective GPP arrangement.
Suitability to market: Average
Investment strategy: Good
Adviser Remuneration: Good