Low-cost SIPP provider A J Bell has added its voice to industry calls for reform of the in-specie contribution regime for Self Invested Personal Pensions (SIPPs).
Billy Mackay, A J Bell marketing director, said the current system was arcane and needed to be simplified as quickly as possible.
"Momentum is building in the industry for reform and simplification of the current system, which is arcane and unnecessarily complex. The concept of creating a debt that is then settled with the market value of the asset is madness and needs to change. For it to work the market value of the asset has to exactly match the debt. With assets such as equities this will not always be the case introducing unnecessary problems for the provider and the investor. "
A J Bell joins Friends Life, Hargreaves Lansdown and other providers in urging the government to take action on the issue.
At the moment a lengthy, complicated and sometimes costly process must be followed before assets can be contributed ‘in-specie' into a pension fund. A major issue can arise if the value of the asset falls during the contribution process leaving the client unable to settle the debt. This creates a situation in which the pension scheme member must fund any shortfall in the value of the asset before the contribution can be completed.
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