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May 2008
Mastering the SIPP world
The launch of Suffolk Life's MasterSIPP marked an important step forward in SIPP development. Launched in October last year, the Master SIPP allows clients to self invest their protected rights funds underneath the same SIPP umbrella as their non protected rights investments. The step was an important one in terms of ensuring Suffolk Life continues to provide products that meet customer needs.
"We were concerned about the restrictions on investment flexibility under our previous SIPP as it was based on a deed poll basis rather than being trust based," said John Moret, director of sales and marketing at Suffolk Life. "We also wanted to facilitate self investment in protected rights and needed to find a way to accommodate that."
How the product works
Suffolk Life developed the MasterSIPP with these changes in mind and clients were able to invest their protected rights from launch last year.
However, bearing in mind that the Department for Work and Pensions (DWP) is not expected to allow self investment of protected rights until October 2008 how can Suffolk Life offer it now?
"We receive a lot of queries from clients asking how we are able to offer this service so early," said Moret. "We've been able to take advantage of the fact we have an insurance company, Suffolk Life Annuities, and we are able to invest in protected rights through that."
The product was in development for 15 months and has been carefully structured to allow for this extra flexibility. Suffolk Life's insurance company Suffolk Life Annuities provides a trustee investment plan (TIP) that the protected rights can be invested in.
As the money is invested in the TIP, the member can then give directions as to how the fund is to be invested. As the fund is invested within a life company the client can then invest in the reasonably wide range of investments allowed under permitted links rules.
Non protected rights money is afforded even greater investment flexibility and will be held in a separate fund from protected rights money so that the client can choose different investment strategies for both.
However, for ease of access both are offered under the umbrella of a single SIPP plan.
MasterSIPP is also available to those with purely protected rights or non protected rights as well as for those with a combination of both. Clients and advisers looking to access their plan via the internet will be able to see their combined plan via a dedicated web portal.
Investments
The MasterSIPP offers online fund dealing via the Cofunds platform as well as an online execution only service through Stocktrade. All cash is held with Bank of Scotland. In addition to this Suffolk Life has relationships with a large number of investment managers, over 30 of which provide automated data feeds on a daily basis. As a result when advisers log on to the site they know they are seeing the most up to date version of a client's records.
Fees
The establishment fee for a MasterSIPP is £300 for new members. If that client then wishes to open up a subsequent plan (for instance they may wish to add protected rights) then they incur an additional fee of £100.
The annual fee for a MasterSIPP is £475 per year and if protected rights are added on then that would be an additional £240 per year. Should a client wish to go into a wider investment range or use different investment managers then they will be charged an extra £100 per year. Some fees are subject to VAT.
Who is it aimed at?
The MasterSIPP replaced Suffolk Life's previous deed poll SIPP on launch. While those clients already in the deed poll SIPP are able to remain in it, it is closed to new business. Existing clients can choose to invest their protected rights money in a MasterSIPP or even transfer their entire SIPP across if they wish.
How have advisers responded to MasterSIPP and how will Suffolk Life develop the product further?
The MasterSIPP has been available for more than six months and has already made a real impression on the SIPP market.
"Things have gone extremely well since we launched the MasterSIPP," said Moret. "If you look at quarter one last year it was the first year post A-Day and it was a real boom time for SIPPs and we did think we might struggle this year in comparison. However, new business is up 10% on this time last year."
According to Moret the desire for self investment of protected rights within a SIPP has exceeded even Suffolk Life's expectations. While initial projections indicated that the proportion of protected rights attached to SIPPs would run to around 30%, in reality it is close to 40%.
However, despite this early success Suffolk Life will not be resting on its laurels and will continue to make amendments in the future.
"We take our service delivery very seriously and we will be looking to maintain that," said Moret. "Going forward we will be looking at how to improve functionality on the adviser web portal as well as extending availability of resources and choice available via the Cofunds platform. We will also be looking at the annual statements that we submit and thinking about how we can provide and plan to make them more attractive and accessible."
WHAT ARE PROTECTED RIGHTS?
Protected rights are the result of individuals choosing to contract out of the State Second Pension (S2P). The Department for Work and Pensions then pays a rebate of some of the National Insurance contributions paid for that person to the pension provider and these are known as protected rights.
Protected rights can make up a significant part of a client's funds with research by the Financial Times estimating the protected rights market at approximately £100bn. However, as yet there has been no real avenue available to those who wish to self invest their protected rights and as a result they are often held separately to non protected rights funds, often in poorly performing insurance company funds.
The SIPP industry has long realised the potential of accessing this untapped resource and providers have been lobbying government for some time to lift the restrictions on self investment in protected rights. These efforts appear to have finally borne fruit with a DWP consultation earlier this year resulting in a recommendation to allow self investment of protected rights. These new guidelines are expected to come into force in October 2008.
KEY FEATURES - AT A GLANCE
- Better control and greater flexibility;
- Ability to invest both protected and non protected rights as part of the same scheme;
- Ability to invest in a wide range of assets including for non-protected rights.
- Listed shares, bonds and funds
- UK authorised unit trusts, OEICs and investment trusts
- Unregulated OEICSs or similar collective investment schemes
- Exchange traded funds and exchange traded commodities
- Warrants, covered warrants, futures, options and derivatives
- Money market deposits
- Structured products
- Hedge funds
- Commercial property
- Real estate investment trusts
- Exempt property unit trusts and other types of property fund
ABOUT SUFFOLK LIFE
Suffolk Life is one of the UK's leading providers and administrators of self-invested personal pensions (SIPPs). Innovation is key to success and this is reflected in its new, trust-based Suffolk Life MasterSIPP. This enables the self-investment of protected rights and non-protected rights (ordinary pension benefits) in the same scheme, including into unsecured income and alternatively secured pension (ASP) - a market-leading proposition. By 31 March 2008 Suffolk Life had established nearly 11,000 SIPPs and managed gross assets of over £3 billion, dealing in a wide range of diverse assets with the purchase and management of property a speciality. The new Suffolk Life MasterSIPP offers exceptional flexibility and no permitted links investment restrictions for ordinary pension benefits.
Central to Suffolk Life's operational efficiency is a highly scaleable IT infrastructure that allows it to provide efficient and fully integrated client management, processing and reporting. It is continuing to make significant ongoing investment in developing its website and online services to offer increasingly efficient ways of working.
This is designed to augment, not replace, the personal touch, which remains at the core of Suffolk Life's business. Through dedicated administration teams it places great value on creating long-term relationships that advisers and investors can rely on. As Suffolk Life's business grows it remains dedicated to maintaining the highest service standards and to being the intelligent choice for SIPPs.
Suffolk Life's knowledge and expertise in SIPPs has resulted in a reputation for service excellence, recognised by many industry awards.
Suffolk Life has won Pensions Management SIPP Service awards in 2003, 2003, 2004, 2006 and 2007.
ADVISER REVIEW
- Andrew Hulmes is a certified financial planner at Mason James
Service Standards
10/10
Their service is unparalleled in the industry. I don't know how they achieve such high standards but I'm glad they do.
Flexibility
10/10
The Suffolk Life Master SIPP has all the flexibility that a full SIPP should have, including the facility to accept protected rights.
Technical Support
9/10
They have offered help and assistance with some complex cases, and their guidance has been of great value to me.
Value for Money
10/10
For such a high standard of service and support the product represents extremely good value for money.
- Andy James is retirement planning manager at Edward Jones
Service Standards
8/10
Suffolk Life only does SIPP administration. They will live or die on the service they provide. Not surprisingly this is of a high standard. That is not to say that they will never make an error but their commitment to putting things right on the odd occasion they do is 100%.
Flexibility
9/10
The new product was designed to be more flexible than the previous one. The 'old' contract offered us all the flexibility we wanted although some other firms may prefer the wider investment choice of the MasterSIPP. Certainly the availability of the protected rights contract is a real benefit.
Technical Support
8/10
With a smaller operation finding the right person is not always easy as there will be limited people who can answer the real technical questions. However they will always phone back and they have never been found wanting as far as their knowledge goes.
Value for Money
7/10
If you are using all the bells and whistles then the contract is great value. If you just want something that is somewhat more 'basic' then the cost is at the higher end. However good service and support will always come at a price.
John Moret is director of sales and marketing at Suffolk Life
John is often referred to as "Mr SIPP" having spent much of his working life since 1990 promoting the advantages of SIPPs. He was the inaugural chairman of the SIPP Provider Group (AMPS) and has worked closely with Government and regulators on a range of issues.
He has spent a large part of his career enjoyably working in the intermediary market. In 2004, following a stint of more than four years as managing director/executive chairman of PPML he joined Suffolk Life. His aims of growing the company's business - building on its reputation for expertise and quality of service - and having some fun along the way - have already been achieved.
In the future he hopes to see some evidence that "pensions simplification" - which he strongly supported - has really worked and hopes that eventually we reach a point where the responsibility for the regulation of pensions does not lie with Government.
His links with the IFP go back to the early nineties and he has been delighted to renew his association following his move to Suffolk Life in 2004.
Helen Morrissey
Editor - Retirement Planner
Incisive Media