My aim with MoretoSIPPs is to educate and provide businesses’ access to unrivalled experience
and knowledge of the
SIPP and related markets.
SIPP Market update – April 2016
I maintain data on the SIPP market going back to 1996 and I provide regular updates on market growth rates and trends. I also conducted a survey of the major SIPP providers in May 2015 –and in February 2015 received certain investment data from the FCA as a result of a Freedom of Information request. I am currently working with an associate on an analysis of SIPP provider profitability –results will be available in May 2016.
Historically the SIPP market has been segmented in various ways often using a 3 way segmentation:
Full choice SIPPs – these SIPPs will allow investment into the widest range of investment vehicles. The actual investments allowed will depend on the SIPP provider.
Restricted choice SIPPs – these SIPPs will have a limited range of investment options again determined by the provider. Excluded from this category are SIPPs that are run by an investment platform and where identifiable investments that are held on an investment platform.
Platform based SIPPs – these SIPPs are invested in assets which are held on an investment platform –usually other “investment wrappers” such as ISAs will be also administered on the platform.
However recent years have seen the gradual disappearance of the restricted choice SIPP and I believe it is more sensible now just to distinguish between:
Non-platform based SIPPs –these SIPPs are effectively the “Full choice SIPP” listed above and in theory allow investment without restriction although in practice many SIPP providers because of regulatory pressures will only allow investment in what are known as “standard Investments”. These specifically will exclude overseas commercial property, UCIS, unquoted shares and other non-mainstream investments. Other assets which may be “allowed” by some providers include gold bullion and peer to peer lending along with some other “alternative” investments.
Platform based SIPPs – as described above.
Data as at April 2016
I currently estimate there are 1.4 million SIPPs (note this number includes one large provider’s SIPPs that in most respects are simply personal pensions ) with assets totalling around £175 billion
The split across the 2 segments above is approximately:
Non-platform - 630,000 SIPPs with assets of approx. £84bn
Platform based – 780,000 SIPPs with assets of approx. £92bn
The chart below shows the number of clients and total assets for providers based on their corresponding ranking. Note the rankings by number of clients and by total assets may apply to different providers.
|Ranking of provider||Number of clients (‘000s)||Total assets (£bn)|
My data effectively covers 80 SIPP providers/operators. Of these 35 have portfolios with less than 2,000 SIPPs. It is acknowledged that there are more providers –all believed to be small. Unfortunately in the absence of an industry wide source and the lack of consistency in the definition of what constitutes a SIPP it is impossible to confirm the total number of providers.
What is clear is that as a result of new regulatory capital requirements the number of providers continues to fall through acquisitions. In 2015 there were 8 deals and to date in 2016 3 have been announced. Further consolidation is expected in the run up to the introduction of the capital requirements in September 2016.
Future growth forecasts
It is too early to judge the impact on the SIPP market of the introduction of the new pension freedoms in April 2015. It is also much too soon to gauge what impact if any the new LISA announced in the 2016 budget will have. There also remains some concern that despite not proceeding with radical pension tax relief reforms in this year’s budget following extensive consultation the chancellor might return to this in a future budget. However overall there are good reasons to believe that the growth in the SIPP market will continue albeit at slightly lower rates than to date.
In a survey I conducted in 2015 providers were asked how many active SIPP operators they expected there to be in 2020 assuming that there are 100 today. The results were:
|Less than 45||6%|
Providers were also asked to predict the size of the SIPP market in 2020 – by number of clients and total assets. The results were:
|Number of SIPPs||Total SIPP Assets|
|Up to 1.5m||20%||Up to £200bn||33%|
|1.51m – 2m||20%||£201bn - £250bn||13%|
|2.01m – 2.5m||60%||£250bn - £299bn||-|
Ignoring any possible future widescale pension tax changes I expect the number of SIPPs to top 2 million before 2020 with SIPP assets by then having climbed to well over £250billion.
Whilst not claiming that my crystal ball is better than anyone else’s in 1999 when there were only 50,000 SIPPs I predicted there would be half a million SIPPs before the end of 2010 – in fact that milestone was achieved in 2009. I then predicted there would be a million SIPPs by 2015 – that milestone was achieved in 2013.
More detailed data on the following and other aspects of the SIPP and retirement options market is available by contacting MoretoSIPPs. Depending on the nature of the data required a fee may be charged.
- The non-advised SIPP market;
- The influence of platforms;
- Estimates of the projected outflow of assets from SIPPs and more data on the use of drawdown;
- Data on investments including the use of non-standard Investments