What you need to know

Following the introduction of the pension freedoms in 2015, new individual pension business, fuelled by pension transfers, increased dramatically until 2017. However, since then DB transfer business has fallen, due in part to increased regulation, which has had a significant impact across the market, particularly for SIPPs. There has also been a decline in the average individual contribution to personal pensions, particularly among the self-employed.

Non-advised sales have increased, with improved platform technology driving the growing number of D2C SIPPs on the market. Multiple pension ownership is increasing, creating more demand and opportunity for consolidation within an individual pension scheme. The eventual implementation of the Pensions Dashboard will also help to drive this activity.

Mintel’s exclusive consumer research focuses on pension ownership, as well as examining how people save for retirement outside of a pension. It then considers individual pension holders’ and non-individual pension holders’ attitudes towards pension and retirement, and their future retirement plans. The Report looks into how often people engage with their pension, before finally focusing on the most important factors for individual pension holders.

Products covered in this Report

The main focus of this Report is individual personal pensions, individual stakeholder pensions and individual SIPPs. GPPs, group SIPPs and employer-sponsored stakeholder pensions fall under the category of workplace pensions and are covered in a separate Report (see Mintel’s Report Workplace Pensions – UK, June 2019).

For the purposes of this Report, Mintel has used the following definitions:

  • Personal pension – a DC pension scheme, set up as a contract between the individual member and the pension provider (usually an insurance company or investment platform). An employer may contribute to a member’s personal pension. Other people are also able to contribute. For example, a person may contribute to their partner’s personal pension, or even to a child’s personal pension.

  • Stakeholder pension – a type of low-cost personal pension which must adhere to certain conditions set by the government. This includes the requirement that the AMC must not be more than 1.5% per year for the first 10 years of scheme membership and thereafter not more than 1%.

  • SIPP – a type of personal pension, which offers individual investors greater flexibility and investment choice. There are two main sub-categories, catering for different markets: streamlined SIPPs, which mainly comprise lower-cost, simplified platform-based SIPPs and mid-range collective SIPPs; and full-range SIPPs. A full-range SIPP is essentially a SIPP in its purest (‘open architecture’) form, allowing every investment permitted by HMRC rules, including commercial property and more esoteric investment types such as derivatives, to be bought and held in the wrapper. Full-range SIPPs tend to have higher administration charges and a higher minimum investment requirement (typically £50,000).

  • SIPPs may also be categorised according to how they are legally structured, ie whether they are insured products (provided by insurance companies and established by deed poll) or non-insured products (written under trust). More than half of all SIPPs in force are estimated to be non-insured.

  • Note that market size and segmentation data provided by the ABI only covers insured SIPPs.

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