FSC Investment Services has launched a Sipp bridging product to enable people retiring between now and April 2015 to take their pension as a tax-free lump sum and keep the residual fund invested until the new pension rules kick in.
The product, which went live September 1, was unveiled in response to the concerns of Frank Cochran, owner of the Wolverhampton-based firm, that many retiring between now and March next year would find themselves stuck in unsuitable products like annuities.
Sipps, he added, represented a good temporary option because they are “very flexible” and “safe”, and facilitate keeping the money invested until the pension changes from the March Budget are officially introduced.
He said: “If you are retiring between now and February/March 2015, you are going to get options from your existing pension providers and will not know what to do. You will probably be offered either an annuity or enhanced annuity, which may not be to your best advantage.
“Sipps are very flexible tools that allow people to put money into a safe area. We are sticking to low risk investment funds, so the money will be safe until April.”
Richard Wadsworth, financial planner for Edinburgh-based Carbon Financial Partners, said: “Any product that provides flexibility in terms of the amount and timing of payments is, to me, a good thing.”
