From Special Report: Focus on Pensions - March 2012
Will 2012 be the year of SSAS?
Growth is picking up in the SSAS market, with many predicting double digit growth that will eclipse the SIPP market. Laura Suter looks at whether this is realistic
Usually commentary on SSASfocuses on it being a minnow in comparison to SIPPs, that it has yet to see mainstream success and that a boom is predicted. This is no longer the case. David is taking on Goliath, as 2012 is predicted to be the year that SSAS growth eclipses that of SIPPs. As Nathan Bridgeman of Talbot and Muir says, “2012 will be the year of the SSAS”.
Fighting the battle
Typically SSASs have been the small brother to SIPPs. While SIPPs saw around 30% pa growth following A Day, SSASs never really seemed to get off the ground. No doubt, they saw solid growth, but the same flood of providers and investors never came into the market.
SIPPs had the benefit of numerous large providers moving in, alongside hefty marketing budgets and regular press coverage. This meant that the product become the must-have among mid to high net worth individuals, with it being a badge of honour to talk about having a SIPP at the golf club of an afternoon.Alongside this popularity came more providers and so more innovation, leading to lite SIPPs, cash only SIPPs, family SIPPs and even SIPPs for children.
Meanwhile, SSASs lingered in the background. Still used by many and seeing growth each year, they did not have the same ‘en vogue’ period, despite many good features.
Typically used by companies and businesspeople, they did not have the same appeal as SIPPs, which led to fewer providers in the market and so, inevitably, less innovation. This is despite many pointing out that they have better features than a SIPP, are often cheaper and make certain purchases easier.
However, it seems that the tides are turning. In a year when the number of SIPP providers are predicted to contract under the burden of regulation and increased capital adequacy and when SIPP growth rates are also predicted to tail off, it seems now may be the time for SSASs to emerge.
This has been predicted most recently by James Mattison, a former director at James Hay Partnership, who has now bought SSAS business Whitehall. While obviously having placed his money, and livelihood, on SSASs emerging from the shadows, Mattison is predicting that the SIPPs boom is over.
Claiming that the number of true SIPPs, so those that allow the full range of investment options, has reached a plateau, he predicts SSASs to take up this growth. He admits that SSAS are seen as outdated, but says that a new pricing structure from Whitehall, to ‘drag it into the 21st century’, will help to attract investors.
He is not alone in predicting this boom. Nathan Bridgeman, director of technical services at Talbot and Muir, is also predicting a bumper year for SSASs, with sales already on the up.
However, while SIPP and SSAS provider Hornbuckle Mitchell is also assuming a rise in SSAS numbers, it does not believe that they will outsell SIPPs this year. David White, managing director of Hornbuckle Mitchell, said, “While there are advantages to using a SSAS I do not foresee the market growing at the same speed as the SIPP market has done.”