Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Looking on the bright side of increased regulation
- Turning buy-to-let property into a SIPP
- Rising taxes and inflation will make SIPPs more attractive
- SIPPs are not just for high earners
- Technological advances could lead to more direct SIPP sales
Market in Brief
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- Two consecutive years of decline
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- Figure 1: New APE* individual pension premiums, by product type, 2004-09
- Demographic and economic influences
- Internal market environment
- Nearly all new business is intermediated
- Top four SIPP providers account for 60% of the value of in-force business
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- Figure 2: SIPP market share, by value of in-force business, September 2009
- Personal pension adspend up in 2009
- Key consumer research findings
- Asset and product ownership
- Attitudes towards SIPPs
Internal Market Environment
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- Key points
- The virtual extinction of final-salary pension schemes
- SIPPs a possible replacement for high-end DB schemes
- Convoluted SIPP charging structure needs streamlining
- Some providers employing contentious business practices
- Regulatory and legislative environment
- Protected rights funds now transferable to any type of SIPP
- Intermediaries will be key in raising awareness
- RDR pushing independent advice further upmarket
- Treating Customers Fairly initiative
- FSA criticism of pension switching leads to decline in transfer business
- The FSA's investigation into small SIPP providers
- Increased regulatory burden likely to lead to consolidation
- MW Pensions fraud case puts smaller providers in an awkward position
- Tax relief on pensions for high earners more restrictive from April 2011
- Concerns about government meddling
Broader Market Environment
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- Key points
- Key target market for SIPPs is very narrow…
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- Figure 3: Size and segmentation of the target wealth market based on investible assets*, October 2009
- …but there is still plenty of room for expansion
- Increasing longevity puts greater pressure on retirement income
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- Figure 4: Cohort life expectancy at age 60, by gender, 1981-2056
- SIPPs well placed to provide advanced retirement income solutions
- UK economic recovery will be slow and drawn out
- Stockmarket performance has improved but many still nursing losses
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- Figure 5: FTSE 100 and FTSE All Share – daily index movements, November 2003-November 2009
- Rising taxes and inflation will encourage many into tax wrappers
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- Figure 6: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, October 2005-October 2009
Competitive Context
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- Key points
- Workplace pensions the direct competitors
- The decline in traditional occupational pension provision
- GPPs and company stakeholder pensions
- The National Pension Savings Scheme
- Non-pension alternatives
- ISAs
- Investment bonds
- Buy-to-let property
Strengths and Weaknesses in the Market
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- Figure 7: SIPP – SWOT analysis, 2009
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Who’s Innovating?
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- Key points
- More providers introducing Family SIPPs
- AXA Winterthur Family Suntrust SIPP
- Curtis Banks Flexible Family Trust
- IPS Partnership Family SIPP
- EU SIPP from London & Colonial
- Dentons launches ‘Single Portfolio’ SIPP
- RDR-ready SIPP from Stadia Trustees
Trade Perspective
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- Recession has not had a negative impact on SIPP market
- Key SIPP clientele
- Impact of RDR
- Impact of MW Pensions fraud scandal
- Key issues affecting the market
- Scope for innovation
Market Size and Forecast
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- Key points
- New individual pension business continues to fall in 2009
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- Figure 8: New individual pension premiums, by product type, 2004-09
- Slowdown in transfer business key factor behind decline
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- Figure 9: Single-premium transfer business, 2006-09
- Over half a million SIPP policies in force at year-end 2008
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- Figure 10: Total number of policies and regular premiums from individual pensions business in force, by pension type, 2004-08
- Forecast
- Return to growth in 2010
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- Figure 11: Forecast of new SIPP APE* premiums, 2004-14
- Factors used in the forecast
Market Share
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- Key points
- Market share is difficult to determine
- Top four providers account for 60% SIPP market share
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- Figure 12: SIPP market share, by value of in-force business, September 2009
- Aegon dominates insured SIPPs market share
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- Figure 13: Insured SIPPs market shares, September 2009
- Fully self-invested SIPP market share
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- Figure 14: Fully self-invested SIPP market shares, September 2009
Companies and Products
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- Major players
- Aegon Scottish Equitable
- AJ Bell
- Hargreaves Lansdown
- James Hay
- Standard Life
- Suffolk Life
Brand Communication and Promotion
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- Key points
- Pension-related adspend down by a quarter in 2009
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- Figure 15: Pensions advertising expenditure, by sub-category, year to October 2007-09
- Top ten pension advertisers account for 70% of total adspend
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- Figure 16: Advertising expenditure by the top ten pensions advertisers, years to October 2008 and 2009
- Majority of advertising done through specialist publications
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- Figure 17: Overview of media type used to advertise pensions-related products, year to October 2009
Channels to Market
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- Key points
- Most new personal pension business driven by IFAs
- IFAs responsible for 89% of new SIPP business in 2009
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- Figure 18: Proportional distribution of new APE* premiums into SIPPs, by distribution channel, 2004-09
- Technological advances could eventually lead to more direct sales
The Consumer – Asset and Product Ownership
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- Key points
- Asset ownership
- Still a high-end product
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- Figure 19: Asset ownership, October 2009
- Male, middle-aged and professional
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- Figure 20: Profile of SIPP target groups, by gender, age, socio-economic group, detailed lifestage, lifestage and marital status, October 2009
- Income, or assets?
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- Figure 21: Profile of SIPP target groups, by working status, gross annual household income and region, October 2009
- The potential for online SIPPs
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- Figure 22: Profile of SIPP target groups, by internet usage frequency, web use and newspaper readership, October 2009
- Product ownership
- An above-average range of investments held
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- Figure 23: Amount of different types of investible assets held, by level of investible assets, October 2009
- SIPPs are niche, even among the well off
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- Figure 24: Pension ownership, by level of investible assets, October 2009
- Property moving people up the wealth ladder...
- …but will they really still want to be landlords in retirement?
- SIPPs’ appeal spans the age groups
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- Figure 25: Asset ownership, by gender and age, October 2009
- The concentration on high earners
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- Figure 26: Asset ownership, by socio-economic group and gross annual household income, October 2009
The Consumer – Attitudes Towards SIPPs
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- Key points
- Relatively high degree of product recognition…
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- Figure 27: Statements on SIPPs and taking control over pension investments, October 2009
- …but sales may have to come through IFAs
- Good news – or bad?
- Appeal among the affluent…
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- Figure 28: Statements on SIPPs and taking control over pension investments, by value of investible assets, October 2009
- …but a strange lack of interest among those who might benefit from consolidation
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- Figure 29: Statements on SIPPs and taking control over pension investments, by form of investible assets, October 2009
- Mixed signals across all age groups
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- Figure 30: Statements on SIPPs and taking control over pension investments, by gender and age, October 2009
- ABs and the willingness to take control
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- Figure 31: Statements on SIPPs and taking control over pension investments, by socio-economic group and lifestage, October 2009
- Higher earners taking advantage of the tax breaks
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- Figure 32: Statements on SIPPs and taking control over pension investments, by household income and online activities, October 2009
The Consumer – Advice and Targeting Opportunities
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- Key points
- High street banks are still a key channel
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- Figure 33: Sources used for financial or investment advice, by total value of investible assets, October 2009
- Some scope for high street sales…
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- Figure 34: Statements on SIPPs and taking control over pension investments, by key advice channels, October 2009
- …but IFAs remain the most promising sales channel
Appendix – The Consumer – Asset Ownership
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- Figure 35: Asset ownership, by total value of investible assets, October 2009
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Appendix – Market Background and Definitions
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- What can be held in SIPPs and how the product has evolved
- SIPP types
- Other definitions
- A-day changes aimed to encourage greater pension participation
- SIPP market fully regulated since April 2007
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