Gordon Brown’s decision not to allow property into SIPPs a few weeks ago caused a fair amount of controversy in the financial and property industries. I too thought that it was strange to let it get so far, only to change the rules at the last minute.
But my sympathy for the property developers and finance men who were looking forward to a bumper sales period for SIPPs has largely disappeared – after all, they were banking on a set of rules which had yet to be finalised, so it was always going to be a risk.
The more I read about allowing property in SIPPs, the more it became clear that this was a proposal that would benefit the rich. And those with large pension pots already are not the people we need to be convincing to start investing in their retirement.
I had hoped that the rules would make it more attractive for the average “man on the street” to invest in a pension, but this now appears that it would not have been the case.
So now the rules have changed, what is left? David Prosser in the Independent argues that the most important part of the pension reforms coming in April are that they will give more pension savers access to decent investment funds. He believes that there is greater transparency in the investment industry than with pension providers, and that pension savers will be made much more aware about how their pensions are performing, and crucially, will be able to do something about it.
He also states that as there is greater competition in the investment industry, average performance is also likely to be better.
You’re exactly right, the beneficiaries of the abandoned SIPPs plans were to be the rich. It would not look good for an avowedly socialist chancellor to give tax breaks to the wealthy at a time when the state pension & Final salary Company Pensions were under threat.