The 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.”