Pensions 

Sipp survey special report: Just capital?

  • Grasp the importance of engaging with providers about their performance
  • Gain an understanding of Sipps and how new rules are likely to affect them in future
  • Learn to use data from the survey for further understanding
CPD
40min
Sipp survey special report: Just capital?

Several months on from the introduction of capital adequacy rules for self-invested personal pension (Sipp) providers, and the dust has settled somewhat. The uptick in merger and acquisition activity seen in advance of those changes has settled back down, and those who deemed themselves capable of meeting the new requirements are getting down to business.

That business continues to boom – for those providing full Sipps, at least. For independent providers, the number of new plans set up over the course of 2016 has seen a sizeable jump when compared with the previous year. This may be in part because of concerns that pensions tax relief would be overhauled in last year’s Budget – a suspicion that proved to be unfounded. 

But the pension freedoms introduced in 2015, as well as recent cuts to the lifetime and annual allowances, suggest this growth is on firm foundations in the short term.

Continued client interest in Sipps comes at a time when providers and advisers alike continue to be hit with Financial Services Compensation Scheme (FSCS) bills relating to Sipps.

However, there is an argument that the spotlight on bad practices has shifted away from the sector towards small self-administered schemes (Ssas). The government’s ongoing consultation on pension scams, which focused on how Ssas are increasingly becoming the vehicle of choice for scammers, may have left Sipps looking all the more attractive by comparison.

The sense, then, is that the market is continuing to benefit from a burgeoning recognition of the plans’ status as a mainstream retirement solution. 

“More and more people will have a greater balance of their retirement dependent on personal pensions,” says Parmenion’s Patrick Ingram. That said, plenty of challenges remain if Sipps are to solidify their position at the centre of the pensions arena.

This year’s survey suggests it is bespoke, not platform Sipps that are benefitting most from the structural changes affecting the marketplace, but converting enquiries into new business is not a simple challenge.

“We are finding that there is a shift away by several providers from taking non-standard esoteric assets. Our enquiry levels have picked up by around 50 per cent, although I have to say some are of a poor quality. Most of these we can simply turn away, but others that could work with a bit of advice we push towards advisers,” says Martin Tilley, director of pensions technical services at Dentons.

This year’s survey features responses from 52 providers, in line with the number of respondents seen in recent editions of our biannual report, and all figures are to 31 December 2016 unless stated. The likes of Carey Pensions and Pilling return to the survey this time around, but others, such as Wensley Mackay, failed to respond. Yorsipp, meanwhile, has stuck to its policy of absenting itself. 

As ever, Money Management hopes that providers will continue to participate over the course of our future editions.

 

Adequate?

Table 1 focuses on Sipp operators’ capital adequacy requirements – the cause of much debate in the industry over recent years. Our last survey, figures for which were up-to-date as of 1 August 2016, found many providers decline to state whether or not they met regulatory requirements.

Comments

CPD
40min
  1. What does the article recommend advisers do despite the fact that one of the tables demonstrates that most providers depend on internal balance sheets?

  2. Which providers are mentioned as having ceased to allow non-standard asset holdings?

  3. What is said about complex investments and commercial property with regards to open-architecture Sipps?

  4. How many more plans have Hornbuckle set up since the year to 1 August 2016?

  5. Name a way in which Dentons plans to raise capital for potential acquisitions

  6. According to Mr Dowding, what may have caused the current pause in acquisitions?

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