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04 Jun 2014

Experts Predict Bright Future For SIPPs Market

The changes to the UK pensions system that Chancellor George Osborne announced during this year´s Budget are predicted to have a positive effect on the SIPP market, according to industry experts, quoted by the FTAdviser.

Rules due to come into effect in April next year will allow savers from defined contribution schemes to use their pension savings without the need to buy an annuity. Instead, they will be able to withdraw a tax-free 25% lump sum of their savings. With the interim reforms already introduced in March this year, pension savers are given more flexibility with their savings, which is going to help more people save for retirement. But as they save more, they will also want to have more control over the way their money is invested, leading to a surge in SIPPs, experts suggest.

One of the factors that will contribute to a changed perception of the public towards pension saving is their knowledge that the money they put aside will not be locked until they retire. Instead it will serve as additional savings that they can use should the need arise, reported FTAdviser.

But the increased demand for SIPPs may have started even before these reforms were announced, some experts claim. There has been a marked transition away from the stakeholder pension market lately, as SIPPs prove to offer better transparency of charges and of the way the money is invested, while also providing a much wider range of options.

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