This follows the FSA’s recent warning that it is concerned about commission-driven Sipp sales and people who are better suited to stakeholder or personal pensions being pushed into higher-charging Sipps.
ScotLife’s research indicates Standard Life is charging considerably more for its Sipp at 1 per cent base annual charge compared with 0.7 per cent for its personal pension product, Scottish Widows charges 0.8 per cent against 0.55-0.64 per cent and Aegon charges 1 per cent against 0.6-0.7 per cent.
ScotLife says its base charges are identical, with investors paying more when they access wider investment choices.
It questions whether advisers can justify the Sipp boom, with HM Revenue and Customs 2004 figures showing that 96 per cent of funds were under £50,000 and industry figures showing under 10 per cent of insurance company Sipps are invested outside the insurer’s fund range.
ScotLife adds that advisers need to be especially careful where the commission is greater on the Sipp, which it says is true of the three providers it names.
Head of communications Alasdair Buchanan says: “The FSA has made it very clear that it is looking at suitability of Sipp sales. Advisers will face misselling complaints if they are not very careful, particularly when some providers are being economical with the truth.”
But Standard Life head of pensions policy John Lawson says what matters is how much the client pays. He says even if it paid 6.5 per cent up-front commission with no trail, its Sipp charge would be 2 per cent for the first six years and 0.7 per cent thereafter – “broadly comparable” to 1.5 per cent for 10 years on stakeholder and 1 per cent thereafter.
He adds: “Ninety-six per cent of Scottish Life’s business might be below £50,000 but our minimum transfer value into Sipp is £50,000 and the average is over £160,000.”
Scottish Widows head of pensions marketing Peter Glancy says: “On small cases, the service charge is greater for our Sipp than for our personal pension but this is clear in our marketing.”
Aegon spokesman Mark Locke says: “If clients do not access our Sipp they do not get charged for it. We have clearly defined our target market.”