Sipp provider benefits from commercial property sales

Sipp provider benefits from commercial property sales
Aidan Crawley/Bloomberg

Glasgow-based self-invested personal pension provider @Sipp has seen profits double as clients flocked to commercial property and look to consolidate their assets.

@Sipp saw its underlying profit increase 150 per cent in the year to March, from £243,000 last year to £600,000 now.

The provider stated it has seen a 77 per cent increase in commercial property cases received, with the number of introducers swelling 43 per cent in the period.

Many of its clients were also looking to consolidate all their pensions into one, the provider stated.

Since the pension freedom reforms in 2015 savers aged 55 plus have been able to access their pensions in any way they like, many being given access to Sipps for the first time.

This has fuelled underlying business growth, @Sipp, which now administers about £1bn of self-invested pension assets, stated.

The independently-owned Sipp provider also introduced its Solo Sipp Plus product earlier this month, which allows clients to tailor the number of investment options they need, with the client only paying for the options they choose. 

Eddie McGuire, managing director of @Sipp, said: "Today’s figures indicate how we are well positioned to capitalise on the continued growth in the current Sipp market - a market fuelled by legacy defined contribution and defined benefit transfers and the broader pensions' freedoms regime.

"Our continued growth reflects the maturity, and efficiency, of our business model. We remain one of only a few full Sipp providers with the strength and scale to compete in the long term and we are confident of continued growth."

The Financial Conduct Authority (FCA) has introduced tougher capital adequacy rules and increased regulatory pressures on Sipp operators in recent years, which David Fox, Dentons Pension Management’s director of sales & marketing, said in February had “resulted in a time of uncertainty" for many operators.

As a result of the clampdown there have been a number of consolidations in the Sipp market, especially where firms held more unusual, higher risk assets directly affected by the capital rules.

Dentons acquired rival Sippchoice in February, adding 1,400 Sipps to its book.

In May 2016, Curtis Banks bought smaller rival Suffolk Life to become one of the largest independent Sipp providers in the UK, with the number of Sipps administered by Curtis Banks doubling after the deal.

A couple months later, Sipp provider Hornbuckle parent Embark Group bought fellow Sipp provider Rowanmoor.

Meanwhile, @Sipp, which has an established presence in Scotland, is planning to develop its foothold in the north and south west of England.

Mr McGuire said: "Our industry is facing several well documented challenges, but I am confident that @Sipp will continue to build significant value by ensuring that advisers and their clients remain at the heart of everything we do."

Alistair Cunningham, financial planning director at Wingate Financial Planning, said he was wary about using Sipps to buy property.

He said: "Apart from owner-occupiers I generally steer clear of buying a property in a Sipp. Whilst there can be tax benefits on the income received, and the potential capital gains tax, I find that many of my professional landlord clients would take risks and make choices that they find very hard to get signed off by pension trustees.