The Financial Times has reported that Standard Life's exaggerated estimates of the amount of residential property people would put into their self-invested pension plans led to the government's U-turn on SIPPs.
The newspaper states that the insurer and pensions provider gave high estimates to the Treasury in order to test the government’s commitment to the scheme, putting likely property investments as high as GBP10 billion.
The chancellor decided to scrap the tax breaks allowing residential property and other assets to go into pension funds after the deciding that it would lose the government too much revenue.
Pension providers gearing up for the anticipated demand for investing property into pension funds lost out when the allowance was revoked. Standard Life is reported to have lost GBP3.5 million. We projected a lower and an upper figure, said John Lawson, head of pensions policy at the mutual insurer. We wanted to make sure the Treasury was absolutely committed to the idea. We don’t regret coming up with our numbers. The government did its own calculations.