Table of Contents
Overview
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- What you need to know
- Products covered in this Report
Executive Summary
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- The market
- Total SIPP assets are now worth £183 billion
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- Figure 1: Proportional distribution of volume and value of SIPPs in force, by sector, as August 2016
- Annual sales are predicted to rise to over 1 million by 2021
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- Figure 2: Forecast of the volume of regulated SIPP sales – Fan chart, 2011-21
- Distribution mix
- Various factors driving demand…
- …but there are many market pressures too
- Companies and brands
- Top five SIPP providers
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- Figure 3: Estimated market share of the largest five SIPP providers, by AUA, 2016
- Market contraction continues
- Providers increase technology investment
- The consumer
- Around 3% of UK adults have a SIPP
- A small proportion of SIPP investors hold non-standard assets
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- Figure 4: Investments held within SIPP, September 2016
- Fund switching and transfer activity
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- Figure 5: Recent activity relating to SIPP investment strategy, transfers and switching, September 2016
- Recent decumulation activity
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- Figure 6: Recent activity relating to SIPP decumulation, September 2016
- Recent changes to contribution levels
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- Figure 7: SIPP contribution levels over the past year, September 2016
- 18% expect to increase their SIPP contributions over the coming year
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- Figure 8: Expected SIPP contribution levels over the coming year, September 2016
- Fund monitoring frequency
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- Figure 9: SIPP account monitoring frequency, September 2016
- Preferred channel to access account
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- Figure 10: Preferred channel to access SIPP account, September 2016
- Decumulation timeframe
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- Figure 11: Length of time planning for SIPP fund to last, September 2016
- SIPP investor strategies
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- Figure 12: Approaches to SIPP investing and decision-making, September 2016
- What we think
Issues and Insights
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- Good prospects for future growth, but still many challenges ahead
- The facts
- The implications
- Opportunities abound in the decumulation market
- The facts
- The implications
The Market – What You Need to Know
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- There are 1.7 million SIPPs in force
- Volume sales rise 6% in 2016
- Distribution mix
- Various factors driving demand…
- …but there are a number key challenges too
Market Size and Forecast
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- SIPP assets rise to over £180 billion
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- Figure 13: Volume and value of SIPPs in force, as at August 2015 vs August 2016
- A diverging market
- New SIPP sales rebound in 2016
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- Figure 14: Number of regulated SIPP sales, 2011-16
- Market forecast
- Solid growth prospects
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- Figure 15: Forecast of the volume of regulated SIPP sales – Fan chart, 2011-21
- Figure 16: Forecast of new SIPP business, at current prices, 2011-21
- Forecast methodology
Channels to Market
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- A significant minority of SIPP sales come via direct channels…
- …but most new business is generated by intermediaries
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- Figure 17: Proportion of FCA-regulated SIPP sales, by firm type, Year to June 2016
Market Drivers
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- Pension freedoms boost attractiveness of SIPPs
- Workplace auto-enrolment creates opportunities for future decumulation business
- Low interest-rate climate favours equity investment
Regulatory and Legislative Changes
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- New CapAd rules come into force
- Providers up their fees or introduce new ones to reflect the added cost of compliance
- Difficulties with identifying and valuing non-standard assets
- Some providers disclose margins on retained interest ahead of April-2017 deadline
- Providers cease to accept in specie contributions
- New Lifetime ISA is unlikely to pose much of a threat to SIPPs
- Cuts to pension tax relief will impact some higher-value SIPP funds
Companies and Brands – What You Need to Know
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- The largest operators
- Market continues to contract
- Slowdown in new product launches, as providers invest more in technology
Market Share
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- Standard Life is the largest SIPP provider by AUA…
- …but Hargreaves Lansdown has the greatest number of SIPP accounts
- Curtis Banks consolidates its place in the top five with the acquisition of Suffolk Life
- James Hay and Mattioli Woods also make key acquisitions
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- Figure 18: Estimated market share of the largest five SIPP providers, by AUA, 2016
- Fall in number of providers as market pressures intensify
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- Figure 19: Number of regulated SIPP providers and percentage of total sales, by top five providers in each quarter, Q1 2008-Q2 2016
Competitive Strategies
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- Investment in platform technology
- Hornbuckle name change signifies expansion drive…
- …as parent, Embark shifts focus onto the platform sector
- James Hay aims to diversify and become a full-service platform
- Industry developments
- New product launches
- AXA sells its wrap platform and closes Family SIPP
- Continued growth in third-party administration
The Consumer – What You Need to Know
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- Around 3% of UK adults have a SIPP
- Only a minority hold non-standard assets
- Pension transfers are common
- 20% of over-55s have drawn cash from their SIPP over the past year
- Majority take active approach to monitoring SIPP
- SIPP holders looking to the long-term
- 31% employ a passive investment strategy
SIPP Asset Mix
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- Proportion of SIPP investors holding cash is roughly the same as a year ago…
- …as rates on SIPP deposits fall…
- …although there is a marked increase in the proportion holding NS&I products
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- Figure 20: Investments held within SIPP, August 2015 and September 2016
- 6% hold unlisted shares
Investment, Transfer & Switching Activity
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- Switching funds is fairly common
- 14% have applied to protect their lifetime allowance within the past year
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- Figure 21: Recent activity relating to SIPP investment strategy, transfers and switching, September 2016
- Transfers in outnumber transfers out
- 20% say they are considering changing SIPP providers within the next 12 months…
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- Figure 22: Expected future activity relating to SIPP investment strategy, transfers and switching, September 2016
- …but this may not be practical or straightforward for all
- 21% of SIPP investors expect to transfer in funds
Decumulation Activity by the Over-55s
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- 20% of SIPP investors have withdrawn money from their SIPP over the past year…
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- Figure 23: Recent activity relating to SIPP decumulation, September 2016
- … while 22% expect to do so over the next 12 months
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- Figure 24: Expected future activity relating to SIPP decumulation, September 2016
- Drawdown will also remain popular
Changes in Contribution Level
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- More SIPP investors have upped their contributions than decreased them in the past year
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- Figure 25: SIPP contribution levels over the past year, September 2016
- Around half expect to maintain their contributions at the current level over the next 12 months
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- Figure 26: Expected SIPP contribution levels over the coming year, September 2016
SIPP Monitoring & Account Access
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- One in five SIPP investors monitor performance at least once a week
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- Figure 27: SIPP account monitoring frequency, September 2016
- 71% prefer to access their SIPP online or via a mobile app
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- Figure 28: Channel used to access SIPP account, September 2016
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- Figure 29: Preferred channel to access SIPP account, September 2016
- Those who prefer to access their account online record a higher monitoring frequency rate
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- Figure 30: SIPP account monitoring frequency, by preferred channel to access SIPP account, September 2016
SIPP Decumulation Timeframe
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- 29% of SIPP investors want their accumulated fund to last them their whole lifetime…
- …while 12% want to pass at least some of it on to family
- 27% have much shorter decumulation timeframes
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- Figure 31: Length of time planning SIPP fund to last, September 2016
Investment Strategies
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- 37% of respondents are investing in a capital growth strategy…
- …while 11% are seeking both growth and income
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- Figure 32: Approaches to SIPP investing and decision-making, September 2016
- 27% delegate investment decision-making to an adviser
- 31% employ a passive investment strategy
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 sales forecast – Best- and worst-case scenarios
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- Figure 33: Forecast of regulated SIPP sales – Best- and worst-case scenarios, 2016-21
- Forecast methodology
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