Digital Sipps replace high risk business at Embark

Digital Sipps replace high risk business at Embark

Pension provider Embark has seen its income from high-risk investments and complex pension products replaced by increasing numbers of digital Sipp clients, its latest accounts have shown. 

According to its results for the year ended December 31, 2019, Embark Pensions, which combines a number of Embark’s pension subsidiaries, saw revenues grow 6.8 per cent, compared with 2018, to reach £29.8m, which was driven by a boost in its digital client base.

This offset a loss in revenue from more complex business, such as high-risk products, which the firm said typically yielded larger fees per pension scheme.

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Phil Smith, group CEO of the Embark, said: “We continue to be pleased with the progressive performance improvements and underlying growth across Embark Pensions. 

“It is particularly positive to see the continuing reduction of risk across the book, and consumer outcomes being the driver of our activities. 

“This sector remains a cornerstone of the Embark Group strategy, and we continue to rapidly progress to becoming the leading provider of digital self-invested pension administration in the UK.”

The self-invested personal pension (Sipp) and small self-administered scheme (Ssas) administrator saw a 13.9 per cent increase in client numbers to reach 3,824, meaning it now operates pensions for about 59,500 savers.

However, net operating profit fell 6.1 per cent to £2.32m due to regulatory costs.

This is the first year since 2015 that the pension firm’s growth was entirely organic, as it had not benefited from any Sipp acquisitions in 2019 and does not plan to seek opportunities in this area going forward.

The firm stated: “The market was abound with acquisition opportunities during 2019, and continues to be so, however we do not see acquisitions in the bespoke Sipp or Ssas market offering value to us looking forward.”

Embark Pensions is made up of four subsidiaries, including Embark Services, EBS Pensions, Rowanmoor Personal Pensions and Rowanmoor Executive Pensions.

Earlier this year (February 21), the managing director and head of Sipp operations at Rowanmoor handed in their resignation after parent company Embark moved to consolidate its pensions management.

Embark carried out a significant management reshuffle and decided to move to a single management team to oversee all of its pension activities going forward.

As a result, Paul Downing, who was managing director of Embark Services, became chief executive of Embark Pensions which runs all four of the subsidiaries.

Over the past couple of years, Embark’s pension subsidiaries have changed their strategies to provide more digitally-executed retirement services and deliver pension solutions across the Sipp and Ssas market, rather than purely administrating schemes.

According to the group, going into 2020, client growth and profit continue to perform well despite the current conditions caused by Covid-19.

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