McPhail: Govt must simplify in-specie pension contributions

The government should allow investors to move assets between different wrappers more easily to aid retirement saving, Tom McPhail, head of pensions research at Hargreaves Lansdown said.

Currently, investors must sell their assets and pay the cash received into another savings vehicle, before repurchasing the asset via the new vehicle.

This is due to HMRC's rule which states pension contributions must be defined as a monetary amount, and does not allow such in-specie contributions.

McPhail said if in-specie contributions were simpler, it would be significantly easier for investors to move their savings from ISAs into pensions, fulfilling the Treasury's objective to promote flexible retirement savings.

"Behavioural economics research shows if you want to get investors to take an interest in long term savings, you have to make it very, very easy for them," said McPhail.

"Removing this barrier would be a way for the Treasury to help reinvigorate retirement saving at no cost to the taxpayer."

However, McPhail said the way in which in-specie transfers currently work for SIPPs, where they are allowed, is already too complicated.

In these cases, the receiving provider must create a debt which the individual's assets must rectify.

If the assets fall in value during the process of the transfer, the provider must chase up the individual to make up the difference.