Some adverts say that, by buying residential property through a SIPP, customers will “effectively” reduce the cost of the property by 40% because of the tax breaks. However, the adverts fail to warn that there could be a substantial tax bill for investment in overseas properties or that the investor could lose control of their property.
Norwich Union is concerned that some customers, particularly those with final-salary pension schemes, might be tempted to transfer funds out of their schemes and buy a residential property through a SIPP, without understanding the implications of such a move.
Iain Oliver, Norwich Union’s head of pensions, said: “We are concerned that some of the current marketing of new SIPP investments is over-simplistic for what is a very complex decision with long-term implications.
"We believe that both the possible rewards and risks should be portrayed in a balanced way to ensure that people understand what the implications of investing residential property in a SIPP are."
