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Self Invested Personal Pensions - SIPPs - UK - December 2012

“The SIPP market has reached a pivotal stage in its development. Faced with the prospect of slower growth, tougher competition and increased capital requirements, the market could well experience greater consolidation in the future, as smaller operators are acquired by larger providers with more robust balance sheets.”

– Sarah Hitchcock, Senior Analyst – Financial Services

Some questions answered in this report include:

  • What’s in a name?
  • Is the boom over?
  • Should there be a standardised list of allowable investments?
  • What impact will the new platform rules have on the SIPP market?
  • Is the reduction in GAD levels stifling SIPP transfer business?

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Table of contents

  1. Introduction

      • Product definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Slowdown in new SIPP business
                • Figure 1: Forecast of new SIPP premiums (at current prices) – fan chart, 2007-17
              • Transfer activity
                • Future prospects
                  • In-force business
                    • Market factors
                      • Regulatory developments
                        • Economic and investment environment
                          • Rival products
                            • Companies, brands and innovation
                              • Product innovation
                                • Market composition and key providers
                                  • Distribution mix: adviser sales dominate
                                    • The consumer
                                      • Market penetration and investment approach
                                        • SIPP contributions
                                          • Figure 2: Amount contributed to SIPP per month, July 2012
                                        • Monitoring activity
                                          • Figure 3: Frequency of monitoring SIPP performance, July 2012
                                        • Investor satisfaction
                                          • Figure 4: Level of satisfaction with SIPP performance, July 2012
                                        • SIPP attributes
                                          • Figure 5: Top six most liked features of a SIPP, July 2012
                                        • Current financial situation and prospects
                                          • Financial objectives
                                            • Figure 6: Top six financial goals over the next 12-18 months, by SIPP investors and prospects, July 2012
                                          • What we think
                                          • Issues in the Market

                                              • What’s in a name?
                                                • Is the boom over?
                                                  • Should there be a standardised list of allowable investments?
                                                    • What impact will the new platform rules have on the SIPP market?
                                                      • Is the reduction in GAD levels stifling SIPP transfer business?
                                                      • Trend Application

                                                        • Develop simplified propositions with tools that assist clients’ decision-making and investment choices
                                                          • It’s an opportune time to tackle the pensions gender gap
                                                            • 2015: Brand Intervention
                                                            • Market Drivers

                                                              • Key points
                                                                • Main factors shaping the market’s development
                                                                  • Regulatory developments
                                                                    • Issues affecting the wider pension industry
                                                                      • Overview of macroeconomic factors influencing investor behaviour
                                                                        • Figure 7: Impact of economic downturn and eurozone crisis on investment attitude/approach – top six responses by SIPP investors, July 2012
                                                                    • Competitor Products – Pension Market Overview

                                                                      • Key points
                                                                        • A large share of the adult population have limited or no pension savings
                                                                          • Figure 8: Ownership of private pension, by product type, by gender, January 2012
                                                                        • Workplace pension reforms could reduce personal pension participation
                                                                          • SIPPs account for a small proportion of total individual pension sales…
                                                                            • Figure 9: Number of new individual pension contracts (including GPPs), by product type, 2007-11
                                                                          • …but represent a third of all new premiums
                                                                            • Figure 10: Value of new individual pension business (including GPPs), by product type, 2007-11
                                                                          • Outside of the transfer market, SIPPs face some competition from SSASs
                                                                            • Figure 11: Value of new EPP and SSAS business, 2007-11
                                                                        • Market SWOT Analysis

                                                                            • Figure 12: UK SIPP market – SWOT analysis, 2012
                                                                        • Who’s Innovating?

                                                                          • Key points
                                                                            • Market expansion and new entrants have driven SIPP innovation
                                                                              • The new RDR regime is fuelling activity in the platform sector…
                                                                                • …with more to follow
                                                                                  • Trade body looks to speed up transfer times
                                                                                  • Market Size and Forecast

                                                                                    • Key points
                                                                                      • Rapid market expansion
                                                                                        • 2012 is expected to record a fall in new SIPP business
                                                                                          • Figure 13: Volume and value of new SIPP business, 2008-12
                                                                                        • Mintel expects strong growth in new business to continue
                                                                                          • Figure 14: Forecast of the number of new SIPP sales – fan chart, 2007-17
                                                                                          • Figure 15: Forecast of the value of new SIPP premiums – fan chart, 2007-17
                                                                                          • Figure 16: Forecast of new SIPP business, at current and constant prices, 2002-17
                                                                                        • Forecast methodology
                                                                                          • Fan chart explanation
                                                                                          • Segment Performance

                                                                                            • Key points
                                                                                              • Non-insured versus insured SIPPs
                                                                                                • Figure 17: Value and volume of new SIPP business, by insured and non-insured business, 2009-12
                                                                                              • Average premiums are much higher in the non-insured sector
                                                                                                • Figure 18: Average new premium, by insured and non-insured business, 2009-12
                                                                                              • The non-insured sector has a much higher transfer rate
                                                                                                • Figure 19: Value of SIPP transfers and share of total single premiums, 2009-12
                                                                                            • Market Share

                                                                                              • Key points
                                                                                                • A fragmented market poised for consolidation
                                                                                                  • Standard Life retains market leader position for third year running
                                                                                                    • Figure 20: Top ten SIPP providers, by value of in-force business, 2012 (mid-year)
                                                                                                  • Other significant players
                                                                                                    • Notable third-party administrators
                                                                                                    • Companies and Products

                                                                                                        • Standard Life
                                                                                                          • Company description
                                                                                                            • Position in the market
                                                                                                              • SIPP product range
                                                                                                                • Distribution mix
                                                                                                                  • Recent financial performance
                                                                                                                    • Figure 21: Interim financial data for Standard Life UK, H1 2011 and H1 2012
                                                                                                                    • Figure 22: Annual financial data for Standard Life UK, 2010 and 2011
                                                                                                                  • Recent activity
                                                                                                                    • AJ Bell
                                                                                                                      • Company description
                                                                                                                        • Position in the market
                                                                                                                          • SIPP product range
                                                                                                                            • Distribution mix
                                                                                                                              • Recent financial performance
                                                                                                                                • Figure 23: Interim financial data for AJ Bell, H1 2011 and H1 2012
                                                                                                                                • Figure 24: Annual financial data for AJ Bell, 2010 and 2011
                                                                                                                              • Recent activity
                                                                                                                                • James Hay Partnership
                                                                                                                                  • Company description
                                                                                                                                    • Position in the market
                                                                                                                                      • SIPP product range
                                                                                                                                        • Distribution mix
                                                                                                                                          • Recent financial performance
                                                                                                                                            • Figure 25: Annual financial data for IFG Group, 2010 and 2011
                                                                                                                                          • Recent activity
                                                                                                                                            • Future plans
                                                                                                                                              • AEGON
                                                                                                                                                • Company description
                                                                                                                                                  • Position in the market
                                                                                                                                                    • SIPP product range
                                                                                                                                                      • Distribution mix
                                                                                                                                                        • Recent financial performance
                                                                                                                                                          • Figure 26: Interim financial data for AEGON UK, H1 2011 and H1 2012
                                                                                                                                                          • Figure 27: Annual financial data for AEGON UK, 2010 and 2011
                                                                                                                                                        • Recent activity
                                                                                                                                                          • Hargreaves Lansdown
                                                                                                                                                            • Company description
                                                                                                                                                              • Position in the market
                                                                                                                                                                • SIPP product range
                                                                                                                                                                  • Distribution mix
                                                                                                                                                                    • Recent financial performance
                                                                                                                                                                      • Figure 28: Annual financial data for Hargreaves Lansdown, 2011 and 2012
                                                                                                                                                                    • Recent activity
                                                                                                                                                                      • Future plans
                                                                                                                                                                        • Suffolk Life
                                                                                                                                                                          • Company description
                                                                                                                                                                            • Position in the market
                                                                                                                                                                              • SIPP product range
                                                                                                                                                                                • Distribution mix
                                                                                                                                                                                  • Recent financial performance
                                                                                                                                                                                    • Figure 29: Annual financial data for Suffolk Life Pensions, 2010 and 2011
                                                                                                                                                                                  • Recent activity
                                                                                                                                                                                    • Hornbuckle Mitchell
                                                                                                                                                                                      • Company description
                                                                                                                                                                                        • SIPP product range
                                                                                                                                                                                          • Distribution mix
                                                                                                                                                                                            • Recent financial performance
                                                                                                                                                                                              • Figure 30: Annual financial data for Hornbuckle Mitchell, 2010 and 2011
                                                                                                                                                                                            • Recent activity
                                                                                                                                                                                            • Brand Communication and Promotion

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Adspend on pension products continues to decline
                                                                                                                                                                                                  • Figure 31: Total advertising expenditure on pensions and retirement income solutions, by sub-category, 2008-12
                                                                                                                                                                                                • DWP is the top pensions advertiser in the year to August 2012
                                                                                                                                                                                                  • Figure 32: Top ten advertisers of pensions and retirement income solutions, 2010-12
                                                                                                                                                                                                • The press accounts for the largest share of pensions adspend
                                                                                                                                                                                                  • Figure 33: Proportional distribution of adspend on pensions and retirement income solutions, by media type, 2010-12
                                                                                                                                                                                                  • Figure 34: Proportional distribution of adspend on pensions and retirement income solutions, by media type, 2010-12
                                                                                                                                                                                              • Channels to Market

                                                                                                                                                                                                • Key points
                                                                                                                                                                                                  • IFAs generate the largest share of SIPP business…
                                                                                                                                                                                                    • Figure 35: New insured SIPPs premiums, by sales channel, 2009-11
                                                                                                                                                                                                  • …while non-intermediated sales are still rare, but growing
                                                                                                                                                                                                    • Figure 36: New non-insured SIPPs premiums, by sales channel, 2009-11
                                                                                                                                                                                                  • Platform revolution
                                                                                                                                                                                                  • Asset Ownership and Investment Approach

                                                                                                                                                                                                    • Key points
                                                                                                                                                                                                      • Survey background
                                                                                                                                                                                                        • SIPP investors tend to be wealthy
                                                                                                                                                                                                          • Figure 37: Wealth profile of SIPP investors versus prospects, by level of investable assets, July 2012
                                                                                                                                                                                                        • There are around 7.6 million UK adults with investable assets of £50K+
                                                                                                                                                                                                          • Ownership of savings, investments and pensions
                                                                                                                                                                                                            • Figure 38: Pensions, investments and other assets held, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                          • Just over two fifths of SIPP investors favour a self-directed approach
                                                                                                                                                                                                            • Figure 39: Approach to investment management and decision-making, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                        • Investor Attitudes and Behaviour

                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                            • Around a quarter of investors say they arranged their SIPP directly with their provider
                                                                                                                                                                                                              • Figure 40: Method of arranging SIPP, by level of investable assets, July 2012
                                                                                                                                                                                                            • Just over half are making monthly contributions to their SIPP
                                                                                                                                                                                                              • Figure 41: Amount contributed to SIPP per month, by asset level, July 2012
                                                                                                                                                                                                            • Most investors keep a regular check on their SIPP’s performance
                                                                                                                                                                                                              • Figure 42: Frequency of monitoring SIPP performance, by asset level, July 2012
                                                                                                                                                                                                            • One in seven are dissatisfied with their SIPP’s performance
                                                                                                                                                                                                              • Figure 43: Level of satisfaction with SIPP performance, by asset level, July 2012
                                                                                                                                                                                                            • The top three selling points of a SIPP are tax benefits, greater control and choice of investments
                                                                                                                                                                                                              • Figure 44: Most liked features of a SIPP, by asset level, July 2012
                                                                                                                                                                                                          • Impact of External Factors on Investment Behaviour

                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                              • Ongoing concerns over the eurozone crisis and domestic economy have made SIPP investors more cautious
                                                                                                                                                                                                                • Figure 45: Impact of economic downturn and eurozone crisis on investment attitude/approach, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                              • A third of SIPP investors say that they are worse off than a year ago…
                                                                                                                                                                                                                • Figure 46: Current financial situation compared to 12 months ago, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                              • …but there is greater optimism looking forward
                                                                                                                                                                                                                • Figure 47: Financial wealth expectations over the next 12 months, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                            • Financial Goals and Investment Plans

                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                • Wealth accumulation is the top financial goal for SIPP investors
                                                                                                                                                                                                                  • Figure 48: Financial goals over the next 12-18 months, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                                • A fifth of SIPP investors expect to add to their pension savings over the coming year
                                                                                                                                                                                                                  • Figure 49: Assets expect to buy, sell or maintain over the next 12 months, by SIPP investors and prospects, July 2012
                                                                                                                                                                                                              • Appendix – Definitions of Related Pension Products

                                                                                                                                                                                                                  • Figure 50: Types of private pension provision, UK
                                                                                                                                                                                                                • The decumulation or ‘at-retirement’ market
                                                                                                                                                                                                                  • Figure 51: Overview of the annuity and retirement income market, 2011

                                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                                              • A J Bell Limited
                                                                                                                                                                                                              • Aegon Group
                                                                                                                                                                                                              • Aegon UK
                                                                                                                                                                                                              • Barclays Stockbrokers Limited
                                                                                                                                                                                                              • Cavanagh Group
                                                                                                                                                                                                              • Cofunds
                                                                                                                                                                                                              • Deutsche Bank AG
                                                                                                                                                                                                              • Grupo Santander Central Hispano S.A.
                                                                                                                                                                                                              • Hargreaves Lansdown Plc
                                                                                                                                                                                                              • Hornbuckle Mitchell Trustees Limited
                                                                                                                                                                                                              • IFG Group Plc
                                                                                                                                                                                                              • Invesco Perpetual
                                                                                                                                                                                                              • Investec
                                                                                                                                                                                                              • James Hay Pension Trustees Limited
                                                                                                                                                                                                              • Legal & General Group PLC
                                                                                                                                                                                                              • Royal Bank of Scotland Group plc
                                                                                                                                                                                                              • Selftrade Investments
                                                                                                                                                                                                              • Skandia UK
                                                                                                                                                                                                              • Standard Life Assurance Company
                                                                                                                                                                                                              • Suffolk Life

                                                                                                                                                                                                              Self Invested Personal Pensions - SIPPs - UK - December 2012

                                                                                                                                                                                                              £1,995.00 (Excl.Tax)