Small self-administered schemes and self-invested personal pensions are understood to have won a reprieve from a European Union threat to their borrowing powers, with the Department for Work and Pensions favouring an opt-out.
The EU occupational pensions directive had threatened Ssass and Sipps with a prohibition against borrowing to invest in property but the DWP is believed to favour exempting schemes which have fewer than 100 lives from the new rules.
Sipps, by virtue of the way they are set up, are almost universally schemes with more than 100 lives but the DWP is planning to exempt them from the EU directive in the same way that other personal pensions have already been exempted.
The decision means the DWP and Inland Revenue's proposals for pension simplification will be watered down because different disclosure and accounting rules will apply for schemes of different size.
The DWP is required to implement the EU directive into UK law by September 2005.
Sipps are predicted to burgeon under the new simplified tax regime while Ssass will retain their appeal as an inheritance tax planning vehicle for passing on pension scheme benefits.
Standard Life senior technical manager John Lawson says: “The DWP is believed to be favouring an exemption that would leave Ssass and Sipps safe but it does mean introducing complexity to the pension simplification project.”
Richard Jacobs Pension & Trustee Services director Richard Jacobs says: “With pension simplification not yet finalised, we have EU rules complicating the matter. Polit-icians say that the EU does not affect us but at every corner you turn it seems to.”
Pension property freedom, p9