SIPPS – due diligence needed
When I was starting AgeWage, it was suggested that we could become a consolidation agent and own a SIPP which would be our way to monetise the service. I was introduced to several SIPP platforms several of which are now consolidated themselves. One of the main consolidators of these SIPPs is Hartleys, which is now closed and gated and causing its policyholders a great deal of concern. The gory details are all over the web, the feeling of Schadenfreude is strong amongst my peers.
Hats off to the FT for exposing the shoddy treatment that Hartley SIPP holders are receiving. This is not a crisis of their own making, but we need to better understand what is going on with the marketing of these and similar plans that leads to such excruciating results
How on earth can an administrator be charging £31m in fees? Why is nobody challenging this?
— Rob Lloyd (@RobPensions) February 10, 2024
Why are SIPPs so popular?
What drives the demand for self invested personal pensions? Ironically, not the urge to self-invest I suggest. Most SIPPs are little more than fronts for “model portfolios” representing the best ideas of advisers or (more recently) the best algorithms of robo-advisers keen to optimise asset allocations.
The SIPP or its offshore variants the QROPS, ROPS QNUPS and 40EEs family, have become popular because they promise more for less and because they promise to fulfil on the promise of the “personal pension”.
This is the front page of Brite Advisor’s website.
Sadly their investors have not been told the truth about where Brite have been investing their money and Brite’s Australian operation has been shut down by its regulators because of a large black hole into which investor’s money has disappeared. The pensions don’t appear to be “low-cost” , they have now “no cost” as the money has all gone. As for being UK pensions, other than the website being written in English, the entire Brite operation is dispersed across the globe. Britain is being used as a marketing tool though for how long people will associate Britain with reputability is open to question,
The messaging on Brite’s website tells us much about how bad actors can make bad pensioni savings schemes attractive, The website is set out as a series of Q&A, though the “A” are thinly disguised sales pitches. Take this
Which rules should I know before transferring pension funds to Australia?
At Brite, we align all our financial advice with the current legislative requirements and best practices within the UK and Australia. This ensures that you can make informed decisions about your pension and investments.
Your current pension arrangement will be transferred to an Australian QROPS (also known as an ROPS) – which allows British expats to move money to an overseas jurisdiction. This gives you the potential to maximise your income, enjoy the full extent of your funds and, in some cases, benefit from tax efficiencies.
These are schemes that are recognised by HMRC and are regulated by the local financial authority.
If your existing pension is part of a defined benefit scheme, an occupational pension scheme, a small self-administered scheme (SSAS), or defined contribution schemes – even multiple – can be transferred to an Australian QROPS or SIPP if you are under 55 years old.
The “rules” in question aren’t explained, the SIPP is explained with beguiling simplicity
Even before you reach retirement age, it’s important to start thinking about what to do with your pension fund – and how best to manage your savings ahead of spending them.
If you have retirement savings that have accumulated across a number of different personal pension pots, a Self-Invested Personal Pension (SIPP) – is a good way to combine them.
Many people may choose to do this, as consolidating pension funds simplifies the administrative process and irons out any potential complications in the future.
Infact, the website is an invitation not to ask the important questions about security of assets and of investment governance. If you are looking to do your due diligence on Brite, don’t start here
These modern day SIPPs are always “on your side” until they’re not..
The great thing about investing in Harleys or Brite is that they make life simple and easy. They don’t tell you anything about what is actually happening to the money you give them and they provide people with the comfort that their financial partners are on their side.
Brite looks like being the next big scandal. Ex-pat Brits in South Africa, Australia , Hong Kong and Dubai can access British pensions at low cost, with high growth and with transparent advantage
There are also charges laid against Brite by the SEC for violating American regulations/ Thanks to Chris Lean for this.
So what exactly is the British connection?
For an organisation that promotes itself as providing British pensions , Brite has a very light footprint in the UK.
My attention is drawn to the PSG SIPP which is wholly owned by Basi & Basi – controlled by Brite (after Brite UK closed down in 2020). John Lymer, Bryte’s Hong Kong compliance specialist named in the Australian action is still a person of significant control of Basi & Basis.
Basi & Basi gave a lot of the pension transfer advice for the thousands of clients who were transferred either into PSG or into MC Trustees QROPS in Malta (thought to be owned by Brite) or and Corinthian Trustees and QROPS in Gibraltar (also thought go be owned by Brite).
I am not saying that any of these organisations is going to follow Brite Australia, but there appears to be connections between them in terms of business flows and people of significant control. In a world of little information -buyer beware, make sure you know just what you are buying in terms of SIPP management and be most careful about investing into QROPS, ROPS and QNUPS.
I consolidated small pension funds into a SIPP. I then treated my SIPP like an ISA, but HMRC added 25% to my contributions. Buying good bonds as well as shares, and re-investing income soon built a reasonable fund. I was motivated to start SIPPs for my wife and myself when I discovered my wife would need to live 40 years after giving her money to purchase an annuity, to see her money back. I could get a better return and retain the capital. Now long retired, we are much more interested in income than capital appreciation. Most of the bonds, stocks and shares are currently paying 8-10 % and the capital is still there, unlike an annuity.