Sipp transfers more than double on pension freedoms

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The number of pension to Sipp transfers increased by 115 per cent between March 2014 and March 2016, data from Origo suggests.

Transfers into other types of pensions are up 74 per cent over the same period.

Pension to annuity transfers dropped 77 per cent, but are projected to move back up by around 14 per cent in 2016 .

The data also shows post-freedoms, there has been a shift in the peak age at which people are transferring their pensions from 60 to 55.

Origo managing director Paul Pettitt says: “There is likely to be a permanent spike at 55 now people can access their funds while they are still working. If consumers want to pay off their mortgage or debts now they have the ability to do that.

“Annuity transfers fell dramatically overnight and it was anticipated that more flexible products that provide income as well as ongoing investment, such as Sipps, would benefit as a result. This has shown to be the case.”

Average transfer values and the number of pots per person being consolidated have remained flat, though processing times have come down.

Since pension freedoms, the FCA has introduced a specialist pension transfer qualification for advisers recommending moving from one defined contribution scheme to another. Those with defined benefit entitlements worth more than £30,000 must seek regulated advice before transferring.

Pettitt says: “Hopefully the FCA doesn’t have a perception that transfers don’t work because they do. We need to look at the bits that aren’t working well and fix that.”