Pension transfers double Sipp provider's client numbers

Pension transfers double Sipp provider's client numbers

Self-invested personal pension (Sipp) provider Momentum Pension is expecting to more than double the number of clients it has due to defined benefit (DB) pension scheme inflows, John McCreadie revealed.

The provider’s head of UK sales told FTAdviser that it expects to reach 15,000 clients in the next 18 months.

Currently, the firm has 7,000 customers.

This will be “achieved by organic growth,” he said, even though Momentum is considering strategic acquisitions of rival providers.

Mr McCreadie said: “55 to 60 per cent of our inflows, by volume, come from defined benefit transfers. It is the highest that it has ever been.”

Momentum is “benefiting from the uptake in the market,” he said, adding that the firm only takes in professionally advised clients.

DB transfers have been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution schemes in order to access them via the pension freedom rules.

Momentum reported growth of 35 per cent in the number of Sipp accounts in the last year, while assets under administration hit £1.25bn.

The average Sipp case rose to around £250,000, due to pension transfers.

The provider is taking in new customers slowly, as it tries to manage its “inflows very carefully, due to capital adequacy rules,” he said.

Since September 2016, when the Financial Conduct Authority (FCA) introduced new capital adequacy rules to the market, Sipp providers’ assets are divided into standard and non-standard.

The higher the proportion of non-standard assets, the greater the capital that is required to be held.

Mr McCreadie also revealed that the company had a visit from the FCA a couple months ago, which pointed out a couple of procedure aspects that need improvement.

He said: “They gave us a clean bill of health, we are still trading. But we integrated those suggestions in our back-office rebuilding process.”

Alistair Cunningham, financial planning director at Surrey-based Wingate Financial Planning, has questioned if this rapid increase in the number of clients is “desirable”.

He said “I would also think (and hope) much of the DB transfer business is behind us.”

Momentum has also been investing in building an improved user interface and have better reporting tools for advisers, Mr McCreadie added.

Last May, Momentum updated its online service to help advisers compare the cost of its Sipps.

The new website was designed to try to ensure costs are completely transparent, while also giving advisers the option to connect quickly to Momentum’s technical support team via smartphones and tablets.

Until the end of the year, the provider expects to offer Sipp online applications to advisers, which is the most common request amongst these professionals, Mr McCreadie said.

In 2018, the company expects to have valuation tools available, he concluded.