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Sipp market tipped to see £2bn growth each year

BusinesswomanThe Self-Invested Personal Pension market has grown 55 per cent since 2016 and is now worth £2.4bn, according to a report published today.

A study by analytics firm GlobalData cites figures from the Association of British Insurers to explore how the market has grown.

It finds customers are using Sipps to consolidate their pensions, with many transferring out of defined benefit pensions to do so.

The study adds Sipps are seen as attractive as they enable the holder to actively choose and manage their investments.

GlobalData financial analyst Danielle Cripps says Sipps have grown in popularity due to the introduction of pension freedoms in 2015 as customers wanted to take advantage of the new flexibility of defined contribution pensions, such as income drawdown and new rules on inheritance tax.

Although the Sipp market is suffering from large numbers of customer complaints related to due diligence failings, it should continue to grow, she adds.

Cripps says: “Tighter regulation is likely to impact how providers and advisors operate in the market.

“Despite this, the market is forecast to remain strong in size and to expand as the aging population seeks to consolidate their pensions and take advantage of the freedoms.

“We estimate the market to grow by an average of £1.9bn each year in individual, new business annual premium equivalent across 2018 to 2020.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Why is a SIPP necessary to consolidate various pension pots or through which to invest the CETV of DPB’s? For the vast majority, a straightforward PP is entirely adequate, investing in mainstream collective funds.

    Bearing in mind the litany of horror stories about flaky UCIS and such like, for those considering (or under pressure to consider) transferring the CETV of their DPB’s, a question of almost equal importance should be: Is there any sound reason to adopt an off piste investment strategy? In most cases, the answer is likely to be a resounding No.

  2. As the information has come from the ABI I wonder how many of these SIPPs are actually Personal Pensions that allow drawdown and have a greater investment choice than in the past?

  3. I have on my shelf a bundle of booklets, one from the MAS entitled Your pension ~ It’s time to choose [now that you’re approaching retirement] and another from the Pensions Regulator entitled Making your retirement choices.

    Why has neither body produced a similar booklet setting out the pro’s and con’s of transferring/consolidating pension benefits BEFORE retiring? Were advisers and providers required BY LAW to issue such booklets AT THE START of the transfer/consolidation discussion process, many, many more people, having read it, would very probably decide, quite rightly, to go no further.

    But hey, such a system is obviously far too practical and straightforward for these bodies and the FCA to grasp.

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