The self-invested personal pension (Sipp) market is expected to grow to £350bn by 2020, according to estimates from John Moret, but his forecast predicts fewer, bigger providers will win the business.
Speaking today at a conference on Sipps, the principal at advice firm MoretoSipps said this 65 per cent growth in assets represented a potential market of 2.5m customers.
At present there are 1.75m Sipp clients, with £230bn in assets, he added.
The majority of the increase in assets is expected to come from further transfers from defined benefit (DB) schemes, responsible for £50bn, Mr Moret said.
Some £30bn will come from transfers from defined contribution (DC) schemes, with a further £30bn forecast to come from life companies legacy products.
The remaining £10bn is expected to come from new clients, he added.
At the moment there are 71 providers in the UK Sipp market, with 65 per cent of the assets managed by platform providers.
But Mr Moret predicted this number will be reduced to 50 by 2020, at the expense of smaller non-platform/non-life company Sipp providers who administer between 1,500 and 3,000 pensions.
This decrease will be brought about by a "financial squeeze" on Sipp providers, because of a reduction of profitability due to lower interest rates, Mr Moret said.
There is also a "reasonable chance" that in the future Sipp providers will be required to pay more levy, he added.
Last January, the Financial Services Compensation Scheme (FSCS) said that the high volume of Sipp complaints would have to trigger a supplementary levy in the life and pensions class for 2016/17 of £36m.
Claims paid out by the FSCS in this market went up by 35 per cent to £105m during this period.
Mr Moret said the impact of redress payable for losses caused due to these claims can be significant on smaller providers, shrinking the market even further.