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Widows criticises Sipps as ‘asset-gathering vehicles’

Scottish Widows has accused providers of switching clients from low-cost personal pensions into expensive, opaque Sipps.

Head of pensions marketing Peter Glancy says many self-invested personal pensions are “asset-gathering vehicles” for in-house funds and predicts that some providers will be forced to revisit sales when Sipp regulation starts next year.

Widows is about to pilot a Sipp-equivalent offering with IFAs ahead of launch next year. The product, which will not fall under Sipp regulation, will create a personalised unit-linked fund for each client, enabling them to choose in-house, externally-managed and property funds. It will also be able to hold protected rights’ money.

The three-tier charging system includes a product charge that decreases as the pension pot grows. An investment charge will vary according to the complexity of the investments and will be calculated as a percentage of the annual charge.

Glancy says the flexible advice charge, negotiated up front by the adviser, encourages fee-based advice.

He says Widows deliberately avoided rushing out its new pension offering after A-Day.

Glancy says: “We saw the risks of what everyone else was doing. Lots of people are moving out of low-charge products into high-charge, opaque contracts. Some of the Sipps operated by our competitors are just asset-gathering vehicles. With this product there will be no bias towards our in-house funds.”

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