Table of Contents
Executive Summary
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- The market
- Over 1.4 million SIPPs in force
- Strong growth in SIPP new business fuelled by RDR regulation
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- Figure 1: Forecast of the volume of regulated SIPP sales – Fan chart, 2010-20
- New pension freedoms set to benefit SIPPs
- New cap ad rules will put added pressure on SIPP providers offering non-standard assets
- Most new SIPPs are set up online
- Companies and brands
- The largest operators
- Number of SIPP firms has fallen over the past three years
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- Figure 2: Number of regulated SIPP providers and percentage of total sales by top five providers in each quarter, Q1 2008-Q2 2015
- Demand for outsourced administration set to grow
- Greater product development activity
- The consumer
- 4% of SIPP investors hold non-standard assets
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- Figure 3: Investments held within SIPPs, August 2015
- Having a good reputation is just as, if not more, important than offering clear and competitive pricing
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- Figure 4: Most important things required from a SIPP provider, August 2015
- Transfers into SIPPs are much more common than transfers out
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- Figure 5: Transfer and switching activity – Past and future, August 2015
- 28% of SIPP investors are planning to move into drawdown
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- Figure 6: How SIPP investors expect to access and use their fund at retirement, August 2015
- What we think
Issues and Insights
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- New opportunities for SIPP providers as a result of new pension freedoms
- The facts
- The implications
- SIPP providers with significant exposure to non-standard assets are vulnerable under new cap ad rules
- The facts
- The implications
- Regulatory intervention threatens retained interest income stream
- The facts
- The implications
The Market – What You Need to Know
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- Increased demand leads to higher sales volumes
- New pension freedoms will benefit SIPPs…
- …but in an environment of greater regulatory pressures
- Most new SIPPs are set up by advisers, although the D2C market is growing
Market Size and Forecast
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- The market is currently worth £168 billion
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- Figure 7: Volume and value of SIPPs in force, as at August 2015
- Market continues to expand
- New business flourishes under the post-RDR regime
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- Figure 8: Number of regulated SIPP sales, 2010-15
- Pension freedoms will help boost future SIPP sales
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- Figure 9: Forecast of the volume of regulated SIPP sales – Fan chart, 2010-20
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- Figure 10: Forecast of new SIPP business, at current and constant prices, 2015-20
- Forecast methodology
Channels to Market
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- Most SIPPs are sold with advice
- Advice firms generate the largest share of SIPP sales
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- Figure 11: Proportion of FCA-regulated SIPP sales, by firm type, 2014
Market Drivers
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- Factors influencing market growth and dynamics
- New demand drivers
- Macroeconomic and investment conditions
Regulatory and Legislative Changes
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- Less than a year to go before firms need to adhere to higher capital adequacy requirements
- Basel III threatens to lower already paltry interest rates on cash deposits
- FCA modifies disclosure rules
- FCA warns SIPP operators to ensure full compliance
- Increased pension freedoms create new opportunities
- Cuts to pension tax relief will impact some SIPP investors
- Workplace auto-enrolment raises profile of retirement saving
- FSCS increases adviser levy to cover cost of rising SIPP claims
- Changes to CASS create additional pressures on firms
- Platforms amend pricing structures in response to new rules
Key Players – What You Need to Know
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- The largest operators
- More mergers and acquisitions likely
- Demand for outsourced administration set to grow
- Greater product development activity
Market Share
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- Standard Life is the largest SIPP administrator by value of in-force business…
- …while Hargreaves Lansdown takes the number one spot in terms of volume
- Many of the larger firms are reporting strong new business inflows
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- Figure 12: Top 14 SIPP providers, by value of in-force business, mid-2015
Competitive Strategies
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- Market consolidation
- The number of SIPP providers has declined over the past three years
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- Figure 13: Number of regulated SIPP providers and percentage of total sales, by top five providers in each quarter, Q1 2008-Q2 2015
- Top five generate around 80% of sales
- Recent mergers and acquisitions
- SIPP administration developments
- Expected growth in third-party administration
- Other distribution developments
- Hornbuckle and Prudential forge alliance
- James Hay agrees SIPP client transfer deal with Towry
Launch Activity and Innovation
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- Recent trends
- Offshore SIPP provider rebrands and launches new SIPP
- Aviva unveils a direct-to-consumer platform SIPP
- Curtis Banks launches a short-term drawdown product
- Xafinity relaunches its SimplySIPP
Advertising and Marketing Activity
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- Pension adspend doubles in the year to September 2015, but is still small relative to the size of the market
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- Figure 14: Top ten advertisers of above-the line, online display and direct mail advertising expenditure on pension products, 2012/13-2014/15
- SIPP adspend appears to be minimal
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- Figure 15: Above-the line, online display and direct mail advertising expenditure on SIPPs, by media type (selected providers only), 2014/15
- Nielsen Media Research coverage
The Consumer – What You Need to Know
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- The typical SIPP investor
- 4% of SIPP investors hold non-standard assets
- Having a good reputation is just as, if not more, important than offering clear and competitive pricing
- Transfers into SIPPs are much more common than transfers out
- 28% of SIPP investors are planning to move into drawdown
SIPP Investment Portfolio
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- 4% of respondents hold non-standard assets…
- …while 32% hold cash deposits or cash funds
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- Figure 16: Investments held within SIPPs, August 2015
Qualities Sought in a SIPP Provider
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- 55% of SIPP investors say they look for a well-established company with a good reputation…
- …while 31% want the broadest possible range of investment choices
- Just 1% give importance to mobile apps
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- Figure 17: Most important things required from a SIPP provider, August 2015
Transfer and Switching Activity
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- 18% of SIPP investors are likely to consider switching provider within three years…
- …while 15% may transfer funds out of their SIPP into another scheme
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- Figure 18: Transfer and switching activity – Past and future, August 2015
Decumulation Plans
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- 33% of SIPP investors have yet to make any decumulation plans
- 28% are likely to opt for flexi-access drawdown
- 8% expect to go down the UFPLS route
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- Figure 19: How SIPP investors expect to access and use their fund at retirement, August 2015
- 23% of SIPP investors do not expect to take professional advice regarding their decumulation plans
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- Figure 20: Likelihood or seeking professional financial advice regarding decumulation plans, August 2015
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer research methodology
- Abbreviations
Appendix – Market Size and Forecast
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- Total market forecast – Best- and worst-case scenarios
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- Figure 21: Forecast of regulated SIPP sales – Best- and worst-case scenarios, 2015-20
- Forecast methodology
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