With the final rules issued for SIPP capital adequacy, I have revisited the predictions I made two months ago, and scored myself a generous 4.75 out of 8 (that’s just under 60% – probably a fail in actuarial exam world!). I thought I would do this as Rolf Dobelli taught me that most industry experts make terrible predictions accusing us of being false prophets LOL.
Here’s how I did.
1. Final rules published late Sept 2014 (after summer holidays)
Was actually early August. But at least I got it within two months, when we have been waiting for over a year. Score 0.5
2. Implementation by 5 April 2016 (18 months)
Actually two years, by 1 September 2016. FCA didn’t link to tax year, which was the basis of my prediction for publication and transitional period. Still, longer than the one year initially proposed. Score 0.5
3. Minimum will be 20k (to allow new entrants)
Bang on! Score 1
4. Initial Capital Requirement will be number of SIPPs (the AMPS way – using AUA doesn’t work)
I should get negative marks for this. Not sure why in that “post AMPS conference moment” I thought there would be a switch. I guess because it would be so easy to use number of SIPPs combined with an average SIPP value to get to the same sort of result. Score 0
5. Surcharge based on Non Standard Assets (this is a key component of their initial proposals)
Easy. Score 1
6. Non Standard Assets will include directly held commercial property and non-breakable term deposits (as too complex to strip out)
Well, they managed it. In my defence, I was also suggesting only two categories rather than an extra category for property as some suggested. I’ll give me a questionable Score 0.25 as unbreakables are still non standard, as are commercial property assets that can’t be transferred in 30 days.
7. The factors will be adjusted to make for a sensible surcharge amount (as the initial formula gave too high result)
That’s what they did. Score 1.
8. To calibrate, they will target two years of running costs based on some hypothetical SIPP books
Hard to tell if that is what they did, but I reckon I wasn’t far wrong. Score 0.5