Self-invested personal pensions (Sipps) have taken off since the changes to pension rules last April. Sipps allow people much more freedom in deciding how their pension pot is to be filled. Despite that, those fortunate enough to have substantial sums to invest still sometimes find the restrictions irksome.

Professional partnerships and entrepreneurs wanting to start their own pension may be put off when they find that the choice of what goes into a Sipp is taken out of their hands by the provider. Intermediaries, such as Standard Life or GE Life, have a fiduciary duty that they may well interpret very differently from the beneficiaries.

David Seaton, of Rowanmoor Pensions, a new pension adviser spun out of Abbey’s James Hay Consultancy last year, believes that he has come up with a solution. He says: “The problem with a Sipp is that, say, for example, you want to buy a property with it, it isn’t you who would actually purchase it, it is the Sipp provider, who would then appoint a property manager. So if you want to pass on the property to the next generation, it gets complicated. Your beneficiary has to set up his or her own Sipp and pay stamp duty. There could be complications from VAT as well.”

Mr Seaton says that he has seen cases where the product provider has either refused to buy the property earmarked by the beneficiary or has ended up buying very unsuitable properties. For instance, one provider found itself with a brothel in Manchester, which refused to pay the rent.

The answer, says Mr Seaton, is what he calls a family pension trust (FPT). This hybrid comes under the Sipp rules but looks like a small self-administered scheme (SSAS) — a mini-pension arrangement available only to limited companies.

The intention is that the FPT will bring the flexibility of the SSAS to a wider audience. It operates by making the beneficiaries of the fund trustees of their own scheme, with the assets being held in a common trust. Mr Seaton says: “Effectively, therefore, they are sharing the assets. If mum and dad have their assets in a trust, they can draw money out but leave the assets in there. Because the children can also join the scheme, they can then use the assets for their own pension.

“The family pension trust gives you more flexibility and, because the provider isn’t involved in the same way, it puts fewer restrictions on what you can do. As senior trustee, the main beneficiary has control.”

For many people, the beauty of the FPT is likely to be when they come to draw an income. Traditionally, at this stage, you have been forced to buy an annuity, which many people dislike. With an FPT, income would come directly from the fund. Payments would be set by an actuary based on your likely life expectancy and the assets in the fund.

Because these calculations would have to be conservative, this process could result in assets being left in the fund when you die. These could then effectively be passed on to younger members of the FPT, free of tax.

Mr Seaton emphasises that this is not the main purpose of an FPT. The problem is that it still looks suspiciously like the inheritable family pension, which many experts had hoped would be ushered in by the advent of alternatively secured pensions (ASPs) last April. Despite howls of protest from the industry, these were effectively killed off by Gordon Brown last year.

Tom McPhail, pensions expert at Hargreaves Lansdown, the independent financial adviser, thinks that a Treasury review into ASPs launched in December could also train its sights on FPTs. He says: “I think that you have to proceed with extreme caution. While [the Government] has not published specific rules in connection with this type of scheme, past actions indicate that there is a strong possibility that it will.

“I think there is nothing wrong with the scheme in principle, but it is so self-defeatingly complex that it will be applicable only to a small group of investors.”

Stuart Bayliss, a director of Annuity Direct, another specialist adviser, says that a much simpler approach for those with less than £1 million in pension assets to pass to their children is for them to take a slice of unused, so far, pension fund money and buy an additional annuity when they reach their late seventies.

Mr Bayliss says: “At this age most people can buy an annuity paying a guaranteed 10 per cent for ten years, ensuring that either they, or their estate, will get back their starting sum at least.

“While still alive, they can then make a gift of the money they receive as an annuity, after tax, to their children. As long as these payments do not affect the giver’s normal standard of living, they should escape inheritance tax (IHT).

“For the sort of affluent audience that we are talking about, this is a real value option as it makes the conversion of a lump sum into income look reasonable.”

Rowanmoor is charging a relatively modest £1,000 to set up its FPT and about £1,000 a year for administration. On top of this, you will almost certainly need to pay for legal, investment and actuarial advice.

Crucial, though, is the attitude of Revenue & Customs. Mr Seaton is confident that the taxman is happy with FPTs, but the Revenue’s surprise decision this month to kill off new tax-based film finance schemes shows that the Government can change direction without warning.

Family pension trusts look like an interesting option worth considering for larger schemes, but you should also check out the alternatives.

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