Pension ‘bad books’ :SIPP Pension Provider, The Lifetime SIPP Company enters administration

retired pension planning

The Lifetime SIPP company is now in administration, and claims for negligent financial advice are stacking up.

But, if like thousands of others, you were persuaded to transfer your pension into a SIPP (Self-Invested Personal Pension) after a cold-call (usually offering a free pension review), then you too may well be caught up in the growing pension mis-selling crisis.

But what is it, and why is Lifetime SIPP involved?

The Lifetime SIPP Company & Pension Mis-Selling

The pension mis-selling crisis is being caused by thousands of pension transfers into higher-risk pension schemes, such as SIPPs.

In many ways, The Lifetime SIPP company is just like many other providers of Self-Invested Personal Pensions – they administrated the pensions on behalf of their clients.

But now, Lifetime SIPP has entered into administration, after transferring around 40 per cent of their accounts away to Hartley Pensions.

Speaking in the financial media, Mark Smith of Mattioli Woods said; “If those [SIPP accounts] left behind are just the bad assets it is going to be really difficult to sort that out because there is no income to manage the business”.

‘Bad Assets’?

Bad assets could be those SIPP investments that have turned, or may turn toxic. They are usually high-risk investments such as mis-sold overseas property investments, unregulated by the watchdogs at the FCA and prone to problems.

People who transferred into SIPPs after cold calls often end up in these investments, because the marketing companies often receive big commissions to drive investors towards them.

If they go into liquidation, or simply get into trouble and don’t pay their returns back into the investor’s pension, the investor could lose their money and become trapped in the investment as it becomes “illiquid”.

What can SIPP investors do?

Firstly, if they have transferred to a SIPP after a cold call, recognise that that’s how most mis-sold pensions begin.

Secondly, find out what their money is invested in, and whether it is high-risk or not.

Because the investments that pose the risk are outside of the FCA’s jurisdiction, there is often little that can be done with the investment firm directly.

However, some proactive investors who believe they been mis-sold have begun making claims in a different way: against the financial advice that led them to transfer their pension in the first place.

Either directly through the FOS or FSCS, or through one of the mis-sold SIPP claims specialist companies that have sprung up around the crisis, many people are finding that they were given negligent financial advice to invest, and can therefore make a claim for some or all of the money they have lost.

This can work because while the investments are often not regulated, financial advice from an FCA authorised adviser is.

For an adviser to recommend and transfer your money into a high-risk investment like storagepods, hotels abroad or even just commercial property funds, they need to make sure that you are:

  • A sophisticated investor: Somebody who knows a lot about investments and understands the risk.
  • A High Net-Worth Individual: Somebody earning over £100k per year, or similar wealth.

If not, and they go ahead and recommend the investment, then it’s possible they may have been negligent, and that’s where the initial grounds for a claim might be!

So is Lifetime big news?

It is already widely reported that Lifetime SIPPs often featured high-risk overseas property investments, from the Caribbean to Cape Verde, as well as farmland, forestry schemes and more, all of which could potentially cripple somebody’s retirement funds if they weren’t suitable.

With potentially thousands of people with Lifetime SIPPs left with “bad assets”, and Lifetime SIPP not the only provider known to accept business from cold-calls and take on high-risk investments, Lifetime SIPP going into administration might not just be big news, it might just be the tip of the iceberg.