Standard Life property pension fund hits £1bn

Standard Life, the Scottish insurer, has taken more than £1bn of assets into its self-invested personal pension (Sipp) in just nine months, benefiting from a mass transfer of funds as investors get ready for sweeping changes to UK pension regulations in April.

Rules which come into force on 6 April - known in the industry as "A-Day" - will allow investors to hold residential property in pensions for the first time, and other alternative investments such as artwork, wine and other collectibles. These will be available only to those who have a Sipp.

The significant inflow of funds has come as investors position themselves to make the most of the changes.

Wealthier investors are piling money into their pension funds to avoid being caught out by new lifetime limits, which will see all pots larger than £1.5m taxed at punitive rates of 55 per cent after retirement. Those with funds larger than the limit, and who register them before A-Day, will be able to avoid the additional tax.

Barry O'Dwyer, the marketing director at Standard Life, said: "Our Sipp has attracted investors who are excited about the opportunities available to them on A-Day. [The product] has seen a proportion of the population re-engage with the pensions industry. These people see their pension fund as a useful asset completely under their control."

He added: "Our plan is to bring Sipps to the mass market so that a far wider range of pension savers will be able to invest on their own or through their employer's scheme at work. If we can replicate in the mass market some of the excitement that Sipps have generated among wealthy investors, that must be in everybody's interest in the long term."

Tom McPhail, the head of research for Hargreaves Lansdown, the financial advisers, said an increasing number of wealthy investors are putting as much as they can into their pension before A-Day. But he is uncertain how popular the option to invest in residential property will prove to be in practice.

"My guess is that tens of thousands of investors are interested in putting residential property in their pensions, but what we don't know yet is how many people will actually go ahead with it next April," he said. "On the face of it, the tax breaks would seem to make it worthwhile for many investors."