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Sipp providers under pressure to raise fees

Hornbuckle Mitchell director Mary Stewart predicts some Sipp providers will be forced to raise charges to try to recoup income losses caused by interest rate cuts.

She says as margins are squeezed, providers will look for other ways to recoup income. “But it is hard. Competitive pressures are so tough that providers will not want to put up costs,” she says.

Hornbuckle Mitchell has taken a reduction in margin to ensure customers continue to receive interest but Stewart believes some providers may not survive the contraction, predicting consolidation in the market.

New business in the firm’s Sipp, SSAS and flexible income pension plan was up by 24 per cent last year and total scheme members rose by 28 per cent to 11,900, and Stewart says it is no longer looking for a buyer.

She says more clients are making in specie transfers into Sipps to reverse the impact of the stockmarket crash on their shares. Investors can also sell shares to their Sipp to release cash.

Stewart says: “Placing a portfolio or some of the holdings in a Sipp would attract tax relief, for many at the higher rate of 40 per cent which would more than offset any losses suffered so far.”

People are increasingly choosing to be co-trustee of their Sipp to avoid having to claim their assets from administrators if the provider goes bust, says Stewart.

SSAS business rose by 30 per cent last year. Stewart puts this down to the loanback facility which allows directors to borrow money from the company pension scheme to ease cashflow if banks are not willing to lend.

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