Lib Dems Scent Victory as Treasury Announces Regulation of SIPPs

9.05.00am BST (GMT +0100) Mon 5th Sep 2005

Commenting on the Treasury's announcement today* that it will consult on the regulation of self-invested personal pensions (SIPPs), Liberal Democrat Shadow Chief Secretary to the Treasury Chris Huhne said: "This is the first small step to reintroducing some sanity in the arrangements for personal pensions, which are otherwise going to lead to large revenue losses for the Treasury that will have to be made up in tax rises elsewhere or spending cuts.

"Regulation of providers of SIPPs by the Financial Services Authority is a sensible step to ensure that the very large tax reliefs paid out are in fact bolstering pensions.

"However, regulating the providers will still leave open the possibility that wealthy individuals can buy holiday homes and other buy to let properties with a 40 per cent discount thanks to their tax relief by putting them into their SIPP, not to mention vintage wine, classic cars or favourite paintings. The investments will not necessarily be regulated.

"This is like regulating the vacuum pack but not the medicine inside.

"This move will only limit the wildest shores of SIPPs, such as property developers trying to unload duff developments onto unsuspecting investors. But the Financial Services Authority may push the Treasury into tougher measures to limit abuse so it is a welcome first step".