Providers push Treasury to simplify pension/ISA transfers

SIPP providers, advisers and life offices have written to the Treasury pressuring it to allow simpler transfers of assets between savings vehicles.

In a letter seen by IFAOnline, Hargreaves Lansdown, Friends Life, Suffolk Life, Pointon York, LV= and AJ Bell have stressed the need for change to tax rules on transfers.

The letter comes after the Treasury promised to work on supporting simpler, more flexible workplace savings.

Over the last fortnight, the Treasury has held talks with industry figures to discuss the possibility of creating a link between pensions and ISAs.

Currently, to transfer assets between different vehicles such as pensions or ISAs an investor must sell their assets, move the money received into the new vehicle, and repurchase the assets.

In SIPPs, where some in-specie contributions are allowed, the receiving provider must create a debt which the individual's assets rectify, creating complications if the assets fall in value during the process.

The restriction is due to Her Majesty's Revenue and Customs' (HMRC) rule stating pension contributions must be defined as a monetary amount.

The letter reads: "These rules are a significant deterrent which we believe should be simplified in the interests of promoting personal financial responsibility and planning."

Tom McPhail, head of pensions research at Hargreaves Lansdown said the Treasury is not likely to approve any initiative to boost workplace saving which increases costs, but allowing in-specie transfers will not do so.

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

Greg Kingston, technical marketing manager at Suffolk Life, said: "The current system is absolutely crazy, and the customer suffers as a result."