Sipp providers have come under attack for channelling clients’ money into their own funds.
Aegon is directing around £416m of Sipp investors’ cash into its insured funds annually as it forces customers to invest regular contributions into these funds.
The average annual contribution across Aegon’s 138,600 plans is £3,000.
LV= has channelled at least £18m into its insured funds by requiring all Sipp investors to have a minimum £3,000 invested with the firm.
LV= has over 6,000 Sipps on its books. It also charges £100 a year if clients choose to use an investment manager other than its five affiliates.
Suffolk Life and Rowanmoor penalise Sipp investors who choose unaffiliated investment managers. Suffolk Life charges up to £75 while Rowanmoor charges £50.
LV= head of pensions Ray Chinn says: “Because we are an insurance company, there has to be a contract of insurance within our plans and the £3,000 forms that contract.
“We are not quite as free as true Sipp providers but it allows us to be more flexible in other areas such as not charging VAT on our Sipp fees.”
An Aegon spokesman says: “Regular premiums can only be paid into the insured element of our plan. The Sipp market is made up largely of lump sum investments so that is what we currently support.”
Suffolk Life marketing director John Moret says: “We have a data feed with a number of investment managers. Without this everything is paper-based which means extra cost and risk.”
Richard Jacobs Pension and Trustee Services managing director Richard Jacobs says: “The firms that force you to have money here and money there to me are not Sipps. Sipp clients do not want something which ties one hand behind their back.”