Self-Invested Personal Pensions - October 2012
The SIPP market is turning a corner. It has long been seen as a boom market in the industry, with provider numbers rising in line with rapidly growing assets under administration. SIPPs went from being a bespoke pension option to a must-have for the mass affluent.
The promise of flexibility, total control over investments and the visibility of assets drew many in – arguably many that would have been better suited to a personal pension – but regardless they wanted to be part of the trend.
But stuttering wider economic growth and investors having fewer assets means the market is steadying. Far from declining, it’s just not rising at the previous rollercoaster rate, but this still poses a problem.
Providers have set out their stalls based on booming growth; they rely on double-figure gains each year, with revenues to match. Firms rushed to get their offerings to this market, meaning some are now bulky, not focused on rising costs and have spiralling staff numbers.
As a result, the FSA has stepped in. It has made noises on capital adequacy, mooting raising it from current low levels and potentially linking it to the risk of assets in a book of business.
When coupled with the recent motions on investment suitability, you could end up with a very different SIPP market. The proposed list of approved SIPP investments has been met by enthusiasm from some – who welcome the clearing up of confusion – and consternation by others, who worry that the freedom SIPPs once had will be curtailed.
But the market has been through change before: when it was first regulated in 2007, when the platforms market grew, and now with the onset of RDR. The market can adapt and change but there is no doubt some providers will not make the cut, while others will flourish. It will be a true case of survival of the fittest.
IN THIS REPORT
Having historically enjoyed healthy growth and a keen interest from investors, SIPPs have hit a turning point. Laura Suter looks at the market
The latest FSA paper on UCIS tackles the regulator’s concerns about the SIPP market, but what will the final picture look like? Greg Kingston finds...
Following changes to GAD tables and caps on income, drawdown no longer looks as attractive. So, asks Billy Mackay, is it time for this to change?
SIPP investors are currently suffering low returns on cash, with money in this asset dwindling in real terms. But is it time providers became more...
As tax avoidance falls increasingly under the spotlight, Robert Graves looks at the implications for pension schemes