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Self Invested Personal Pensions - SIPPs - UK - December 2014

Published By :

Mintel

Published Date : Dec 2014

Category :

Banking

No. of Pages : 88 Pages

The 2014 Budget reforms have given pension holders greater flexibility and choice at retirement, greatly stirring up the landscape of the pensions’ industry. While income drawdown seems to be the most popular choice among SIPP investors following the Budget announcement, annuities still remain on the books for many, alongside encashment.
Table of Content

Introduction

Report scope and definitions
Abbreviations

Executive Summary

The market
SIPP market is expected to continue on its upward path
Figure 1: Forecast of volume of new SIPP sales (at current prices) – fan chart, 2009-19
Figure 2: Forecast of value of new SIPP premiums (at current prices) – fan chart, 2009-19
SIPP assets under management are approaching £50 billion
Figure 3: Total wealth management industry SIPP assets, 2008-13
Market factors
Confidence is rising among the higher earners and SIPP investors
Key regulatory developments
Nearly three in five investors arranged their SIPP through an adviser
Figure 4: SIPP purchasing methods, July 2014
Companies, brands and innovation
Standard Life holds leading position in SIPP market share in 2014
Consolidation in the SIPP market expected to continue
Consolidation and regulation stifles innovation in SIPP market
SIPP providers supporting advisers
Suffolk Life makes switching SIPPs easier
James Hay succeeds with a modular approach
The consumer
SIPP ownership
SIPP investment ownership
Figure 5: SIPP Investment ownership, July 2014
Many investors stick to core investment products
Figure 6: Number of SIPP investment products owned by SIPP holders, July 2014
General attitudes and behaviour of SIPP investors
Figure 7: Investor behavioural habits, July 2014
Investor satisfaction with SIPP investment range
Figure 8: Investor satisfaction with SIPP investment range, July 2014
Investor attitudes towards SIPP transfers
Figure 9: Investor attitudes towards SIPP transfers, by ‘Yes’ answers, July 2004
SIPP investors have a strong preference for drawdown over annuities
Figure 10: Investor plans at retirement, July 2014
Investor plans to seek advice at retirement
Figure 11: Investor intentions to seek financial advice at retirement, July 2014
What we think

Issues and Insights

The modular approach could be the key to success
The facts
The implications
Reactions to pension reforms push income drawdown to the top
The facts
The implications

Trend Application

Return to the Experts
Make It Mine
Mintel Futures: Brand Intervention

Market Drivers and Regulatory Environment

Key points
Confidence is rising among the higher earners…
Figure 12: How respondents would describe their financial situation, by gross annual household income, September 2014
Figure 13: Current financial situation compared to a year ago, by gross annual household income, September 2014
and among SIPP investors
Figure 14: Pension investment plans, by SIPP and other pension ownership, July 2014
Bank rate cuts hit SIPP firms’ interest income
FCA publishes its final capital adequacy requirements…
ready to stir up the SIPP landscape…
and accelerate consolidation of SIPP providers
FCA’s thematic review into SIPP providers finds ‘widespread’ failings
Market developments in the wider pension industry
2014 Budget: a positive development for the SIPPs market
Government to abolish the 55% inheritance tax on pensions funds
SIPP complaints to the FOS soar
Auto-enrolment continues to boost pension participation in the UK

Who’s Innovating?

Key points
Consolidation and regulation stifles innovation in SIPP market
SIPP providers supporting advisers
Fidelity’s Retirement Service
Rowanmoor Group’s series of ‘New Insights’ adviser workshops
AJ Bell’s Infocentre
Numerous SIPP providers cut their pension charges
Suffolk Life makes switching SIPPs easier
Will James Hay pave the way for a modular approach?

Market Size and Forecast

Key points
SIPP sales nearly doubled in volume in 2013
Figure 15: Volume and value of new SIPP business, 2009-13
SIPP assets under management are approaching £50 billion
Figure 16: Total wealth management industry SIPP assets, 2008-13
Growth in new SIPP business is expected to continue over the next five years
Figure 17: Forecast of volume of new SIPP sales (at current prices) – fan chart, 2009-19
Figure 18: Forecast of value of new SIPP premiums (at current prices) – fan chart, 2009-19
Figure 19: Forecast of volume and value of new SIPP business, at current and constant prices, 2014-19
Forecast methodology
Fan chart explanation

Market Share

Key points
Standard Life holds leading position in SIPP market share in 2014
Figure 20: Top 10 SIPP providers, by value of in-force business, as at 1 August 2014
Consolidation in the SIPP market expected to continue

Companies and Products

AJ Bell
Company description
SIPP product range
Distribution mix
Recent financial performance
Figure 21: Interim financial data for AJ Bell, H1 2013 and H1 2014
Recent activity
Hargreaves Lansdown
Company description
SIPP product range
Distribution mix
Recent financial performance
Figure 22: Annual financial data for Hargreaves Lansdown, 2013-14
James Hay Partnership
Company description
SIPP product range
Distribution mix
Recent financial performance
Figure 23: Annual financial data for IFG Group PLC and James Hay Partnership, 2012-13
Figure 24: Half year financial data for IFG Group PLC and James Hay Partnership, 2013-14
Recent activity
Standard Life
Company description
SIPP product range
Distribution mix
Recent financial performance
Figure 25: Half year financial data for Standard Life, 2013-14
Recent activity
Suffolk Life
Company description
SIPP product range
Distribution mix
Recent financial performance
Recent activity

Brand Communication and Promotion

Key points
Decline in overall adspend on pension products
Figure 26: Total advertising expenditure on pensions and retirement income solutions, by sub-category, 2010/11-2013/14
Hargreaves Lansdown holds its position as top SIPP advertiser
Figure 27: Top 10 advertisers of SIPPs, 2011/12-2013/14 (year ending 31 August)
Direct mail accounts for the largest share of adspend on SIPPs
Figure 28: Proportional distribution of adspend on SIPPs of the top 10 advertisers, by media type, 2013/14 (year ending 31 August 2014)
A note on adspend

Channels to Market

Key points
Nearly three in five investors arranged their SIPP through an adviser
Figure 29: SIPP purchasing methods, August 2013 and July 2014
Direct channels still remain popular
Figure 30: SIPP purchasing methods, by age, July 2014
More than half of SIPP investors favour a self-directed management approach
Figure 31: Approach to investment management and decision-making, by SIPP and other pension ownership, July 2014

SIPP and Pension Ownership in Context

Key points
SIPP ownership is low amongst the general population…
Figure 32: Active pension ownership, by scheme type, December 2013
while workplace pension ownership has increased significantly as a result of auto-enrolment
SIPPs are the most attractive among higher earners
Figure 33: Active pension ownership, by highest rate of income tax paid, December 2013

SIPP Investment Ownership

Key points
Survey background
Figure 34: SIPP and pension ownership among the more affluent segments, July 2014
Mainstream investment vehicles are most popular amongst SIPP investors
Figure 35: SIPP investment ownership, July 2014
Many investors shy away from highly diversified portfolios
Figure 36: Number of SIPP investment products owned by SIPP holders, July 2014
Figure 37: SIPP investment ownership, by number of investment products, July 2014
More streamlined products may be the solution
Financial advice facilitates more complex investments
Figure 38: SIPP investment ownership, by SIPP purchasing method, July 2014

General Attitudes and Behaviour of SIPP Investors

Key points
Nearly two fifths of SIPP investors make regular contributions
Figure 39: Investor behavioural habits, July 2014
Direct SIPP holders are more likely to mainly use lump-sum contributions
Figure 40: Investor contribution habits, by SIPP purchasing method, July 2014
Over one third of investors keep a regular check on their SIPP’s performance
Figure 41: Investor frequency of monitoring SIPP performance, by SIPP purchasing method, July 2014
Men and over-55s tend to be more engaged with their SIPP
Figure 42: Investor frequency of monitoring SIPP performance, by gender and age, July 2014
Figure 43: Investor frequency of seeking professional advice, by gender and age, July 2014
Demand for ad hoc advice

Investor Satisfaction with SIPP Investment Range

Key points
More than one in five are dissatisfied with the range of investments offered by their SIPP
Figure 44: Investor satisfaction with SIPP investment range, July 2014
More affluent respondents are more likely to be satisfied with the choice offered
Figure 45: Investor satisfaction with SIPP investment range, by gender and value of investable assets, July 2014

Investor Attitudes towards SIPP Transfers

Key points
Transfers into SIPPs are fairly common…
Figure 46: Investor attitudes towards SIPP transfers, July 2014
while transfers out of SIPPs are less frequent
Over one in five have previously switched SIPP provider

Investment Plans at Retirement

Key points
Income drawdown is the most commonly chosen approach at retirement
Figure 47: Investor plans at retirement, July 2014
Just over one in 10 SIPP investors plan to take their entire pension fund as cash
Nearly three in 10 are unsure of what they will do at retirement
Figure 48: Investor plans at retirement, by age, July 2014
Wealthier SIPP investors are more confident of their retirement plans
Figure 49: Investor plans at retirement, by value of investable assets, July 2014
Little significant difference between advised and non-advised investors
Figure 50: Investor plans at retirement, by SIPP purchasing method, July 2014

Investor Plans to Seek Advice at Retirement

Key points
Majority of SIPP investors plan to seek professional advice at retirement
Figure 51: Investor intentions to seek financial advice at retirement, July 2014
Figure 52: Investor intentions to seek financial advice at retirement, by SIPP purchasing method, July 2014
Nearly three quarters of unsure investors plan to seek advice
Figure 53: Investor intentions to seek financial advice at retirement, by plans at retirement, July 2014

Appendix – Market Forecast

Figure 54: Forecast of volume of new SIPP sales – best- and worst-case scenario, 2014-19
Figure 55: Forecast of value of new SIPP premiums – best- and worst-case scenario, 2014-19

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