by Simon Davies of Wheatley-based SRD Financial Management

We are moving into a new world of pensions. The time is right to revitalise, revamp and renew the world of corporate pensions.

The new legislation involving Self Invested Personal Pensions (SIPPs) creates the foundation stone where solutions can be found to match the differing needs of employees, without the hidden and often opaque costs of insured products, the onerous burdens of the defined benefit regimes and complicated Pensions Act requirements.

The Government is keen to encourage company sponsored schemes, and to encourage individuals to save towards retirement. But there has been a massive void for many years where there has been a huge reduction in final salary schemes, because they are now just too expensive to establish and run.

Many large employers have already closed their existing final salary schemes to new employees and all occupational pensions are now under threat due to the onerous implications of legislation, early leaver administration, the need for member nominated and professional trustees, and the funding requirements that can cause serious financial instability.

At the other end of the spectrum is the Stakeholder pension, where there has been little effective take-up.

It is now virtually accepted that defined contribution schemes are the way forward for most employers.

But what is a good quality defined contribution scheme? Traditional insured occupational schemes have been tried over the years and found wanting. Administration has tended to be poor, investment indifferent.

Any solution, if it is to attract large contributions from the UK's suspicious and mobile workforce, must offer: l The ability to invest in a much broader range of investments than equity. Property, cash and bonds need to be available.

l Full portability and flexibility with no penalty - people no longer spend their whole working life with one employer.

l Greater control for the client. People will expect to have the option of more control on how their money is invested, if they are to be persuaded that a pension is an investment and not a lottery.

l Pensions need to be actively sold and advised on, with sufficient charges to allow this, levied on a clear basis.

There has been nervousness about the costs involved in SIPPs and the quality of administration.

But get it right and they represent the future solution for many companies wanting to provide employees with a good pension.

SIPPs are arguably the most simple and flexible pension around. They can be portable and incur no cost when moving between employers.

They can be converted into a personal pension at no penalty. Contributions can stop during periods between employment. The assets stay off the employer's balance sheet and if the employer goes down, the pension assets are protected.

If someone wants to pursue a risky or risk-averse investment course with their pension fund, then they can do this too. And best of all, owning a Sipp can be fun - people have used their funds to buy their business premises, land for development and even a fishing lake.

This is an opportunity to provide a higher level of service to companies and so greater protection and returns on wealth, through thorough planning with the individual and company in mind.

Contact: Simon Davies, 01865 873724.