Suffolk Life has no age limit and neither does James Hay, one of the early adopters of Sipps, which moved all its legacy clients into either capped drawdown or converted their plans to flexi-access drawdown.
But Mr Kingston pointed to another potential problem for people switching to modern Sipps, many of which have updated their asset criteria following the regulator’s tougher stance on non-standard assets.
He said: “Advisers tell us that a number of other providers do not offer the flexibility they once did, including forcing clients to sell certain types of assets before taking drawdown.”
Robin Barnett, financial planner at KDW Financial Planning, who is currently fighting one of the big insurers to pay for the transfer advice for his client, said: “The question is whether the insurance companies have an obligation either morally or legally to keep legacy business up to date, be it on technological things or things like fund choice, or whether they can just flog them off and [the acquiring firm] can run them at a low cost on a run off basis.”
He said clients in this situation were often shocked as they knew about the 2011 rule changes and did not expect to incur the extra advice cost.
He said at the very least the insurance companies "ought to be prepared to put in place facilities such as pay the adviser fees or offer the advice in house free of charge.”
But fellow adviser Alan Chan, director at chartered financial planner at IFS Wealth & Pensions, did not see this as being an issue.
He said: “We have a handful of clients in legacy drawdown with very big life companies but this hasn’t really been a problem for us.
“In most cases, the client can switch to the new ‘flexi-access drawdown’ with little issues and carry on in drawdown.”
There has been some regulatory pressure on legacy business, with the regulator implementing a 1 per cent cap on exit charges for people wishing to make use of the pension freedoms in March 2017.
It is also currently reviewing legacy pensions outside the workplace, saying it wanted to ensure people in such contracts are treated fairly.
carmen.reichman@ft.com
