The Platforum: Pension wrappers set to clean up

The bulk of platform assets now sit within pension wrappers and the net sales figures look increasingly promising

Annalise Toberman Peach 250x255

While we like to report stats and facts at The Platforum, we also enjoy exploring the odd philosophical question. In January, we asked advisers what they perceive a platform to be.

Sixteen per cent responded that a platform is best described as a tax wrapper provider (as opposed to, for example, an investment solution or piece of technology kit). Not a huge proportion but significant nonetheless.

So looking at the platform market through a tax wrapper lens, what is the lay of the land today? We analyse tax wrapper split data on a quarterly basis, both in terms of assets and sales. It really goes without saying that this is a growing area of interest in light of the new flexi-access drawdown rules. Pensions are becoming more attractive as a means of income tax and inheritance tax planning.

Not all platforms provide consistent data for assets under administration, gross sales and net sales by tax wrapper, so the numbers are not a perfect reflection of the market. However, they give a good indication of its current state as well as the direction of travel.

The chart aggregates the tax wrapper data from platforms that have supplied us with asset, gross and net sales figures for Q4 2014. This encompasses a range of platforms, from life companies to fund manager-owned platforms and “independents”. The bulk of platform assets sit within some kind of pension wrapper, be that personal pension, Sipp, SSAS etc., and the net sales figures look very promising for pension business. Conversely, net sales for Isa business suggest that, although this wrapper continues to see considerable inflows, the proportion of assets held within it is decreasing.

The trend is mirrored on the direct-to-consumer side of things thanks to the increased Isa allowance and new pension freedoms. Working from a much lower base of wrapped business, even the stockbroker platforms have seen a shift in money towards Isas and pensions. These platforms have been working on widening their appeal beyond day-traders in a bid to attract stickier money.


We could see an even bigger boost for pension net sales on platforms in the Q1 data. Will advisers and end investors panic-buy, given Labour’s intention to cut the annual and lifetime allowance if it emerges victorious from the election?

We also hear from conversations with those close to the action that advisers are increasingly looking to consolidate their clients’ pension assets. There is plenty of personal pension business still up for grabs that was formerly in defined contribution schemes. We expect much of this business to move into Sipps.

Does this mean more assets on platforms too? Naturally, our focus is primarily on platform players. Yet there are dozens of non-platform Sipp providers also vying for a piece of the action. While in-house platform Sipps tend to be quite “vanilla”, offering access to mutual funds, listed securities and not much else at relatively low cost, the off-platform specialists can work with commercial property and more esoteric investments, sometimes including Ucis. In recent years, we have seen the plain vanilla platform Sipps scoop up assets at the expense of the specialist products – all signs point to this trend continuing as advisers understandably do not want to pay for functionality they do not need.

In summary, pension wrappers – and especially those provided by platforms – look set to clean up this quarter. I am not sure in the past that platforms would have wanted advisers describing them as tax wrapper providers first and foremost, yet currently it is an advantageous label to have.

Annalise Toberman is senior researcher at The Platforum 



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