Use of group Sipps in the workplace post-2012 has been confirmed as acceptable for employers wanting to meet their auto-enrolment requirements, provided a default is offered and charges are not too high.

The group Sipp market is set to grow as employees look for more cost-effective ways to comply with company shareholding requirements.

Many companies required senior staff to hold substantial shareholdings to ensure that their financial interests were aligned with the company’s performance.

A director who is required to own £100,000 worth of shares would effectively only need to find £60,000 to hold these through a Sipp [because of the 40% tax bracket].

Once these shares are held within the Sipp the dividends are not subject to income tax and, if the individual moves on, they can sell their shares within the Sipp without having to pay capital gains tax.

The transition from defined benefit to defined contribution pension schemes could boost the appeal of group Sipps.

A lot of senior executives are in DC arrangements and quite often are not getting any preferential employer contributions, in which case there are going to be a lot of senior people who aren’t going to be affected by the lifetime allowance. And for those, this does become very tax-efficient,’

Previously Sipps did not allow protected rights. This has changed and SIPPs  allow for both protected and additional rights.

For advice on Group SIPPs call 0800 043 0725