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Sipp survey reveals business recycling

Sipps will be the core part of most advisers’ business over the next five years, according to a survey by CWC Research.

But its findings suggest that most Sipp business is recycled from existing pension investments.

The survey, on behalf of software company Mastek, reveals that two-thirds of advisers expect self-invested personal pensions to generate the bulk of their income.

It finds that 75 per cent of new Sipp investment is transferred from other types of pensions. Eighty-five per cent of Sipp investments are pre-retirement business.

Mastek head of life and pensions Trish Henry says: “We have seen increasing demand from clients looking for expertise on how to process and administer Sipp business effectively. What this research demonstrates is that providers are absolutely right to be gearing up for higher volumes of Sipp business.”

CWC Research senior partner Clive Waller says higher commission for Sipps may be behind the surge in business.

He says: “In some cases, commission for selling Sipps is twice that for selling basic stakeholder pensions. Perhaps we need to be asking if advisers are recycling pension investments after taking a second cut of commission and, if so, are they justified? We would have to say they are not if they are taking over 8 per cent up front. But this is not true of most IFAs, with most appearing to be justified in moving clients to Sipps. There will certainly be some insurers that are losers as Sipps become more prevalent.”

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