PensionsMar 31 2017

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
  • 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
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CPD
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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.

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