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United Kingdom

Pensions Ombudsman: SIPP cannot be closed while distressed investment remains live, to avoid prejudicing FSCS recovery; provider may increase fees despite £1 value (Mr T PO-28218/PO-28491)

Published on: 15 January 2020

Published by a LexisNexis Pensions expert
Legal News
Table of contents
  • Original news
  • Summary
  • What were the facts?
  • What was the Pensions Ombudsman’s decision?
  • What is the impact of this determination?
Article summary

Original news Mr T(PO-28491)/Mr T(PO-28218)—14 November 2019

Summary

The Pensions Ombudsman rejected a grievance alleging a Self-Invested Personal Pension (SIPP) improperly levied an £800 yearly charge on pension assets valued at £1. The SIPP had pursued a speculative property investment that became distressed, though it did not go insolvent. As the investment remained active, the provider was entitled to refuse closure of the plan, since winding it up could potentially jeopardise any FSCS recovery. Under the plan rules, the provider was also permitted to raise its fees on giving notice. This matter highlights the potentially far-reaching consequences of choosing speculative investments.

What were the facts?

These two determinations stem from essentially the same circumstances. Mr T was a member of a SIPP. The SIPP provider was entitled to an annual management charge, which could be increased on notice to members...

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