UK-based independent financial advisory service SG Wealth Management has warned that self-invested personal pensions are being misrepresented to UK consumers, as the industry insists on treating them as a product to be sold rather than an all-embracing tax-advantaged wrapper.

The company commented that the industry is selling self-invested personal pensions (SIPPs) to people who don’t need them, and under-delivering against the benefits they can provide to those who do, because of its quest to find more lucrative pension arrangements for existing client arrangements.

SG Wealth Management added that an SIPP is not a product at all, but rather a pension ‘basket’ containing a wider range of investment assets – from unit trust and OIEC funds, to individual stocks and shares, through to holdings in commercial property – that is no different from a conventional well-balanced portfolio, but has more tax advantages.

The company said that SIPPs are often sold to those for whom a more straightforward pension savings plan would be appropriate because of providers’ desire for commission. It added that, at the other end of the scale, many consumers are not getting access to the full value of SIPPs because financial advisors are ill-equipped to deliver its real advantages.

Neil Shillito, executive director of SG Wealth Management, concluded: As the FSA sorts out the details of how SIPPs are going to be regulated later this year, they must take steps to control this over-selling and under-delivering.