Self Invested Personal Pensions - SIPPs - UK - December 2014
“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.”
– Chryso Kolakkides, Senior Financial Services Analyst
This report discusses the following key topics:
- The modular approach could be the key to success
- Reactions to pension reforms push income drawdown to the top
Self-Invested Personal Pensions (SIPPs) have traditionally been regarded as being for more affluent investors, allowing them to invest in a wide range of non-standard financial products. However, the popularity of early SIPPs, improved technology and the rise of self-directed investing has led to a number of basic, low-cost SIPPs entering the market which have broadened the product’s target audience to include mainstream investors. As a result, the SIPP market has grown impressively in 2013 and is expected to continue in 2014 and throughout the next five years.
Increased regulatory scrutiny is also changing the industry’s landscape with the new capital adequacy regulations coming into force in September 2016. By increasing the minimum capital requirement for SIPP firms, the regulator’s ruling is already exerting increased pressure on the smaller companies. Over the course of 2014, there have been a number of acquisitions from stronger providers and consolidation is likely to continue.
In this report, Mintel examines consumers’ attitudes towards SIPPs. It looks at the channels through which consumers purchase their SIPP, what investments consumers hold within their SIPP and their satisfaction with the range of investments it provides. This report also investigates investors’ behaviour and intentions in terms of SIPP transfers and switching providers, as well as their plans at retirement following the announcement of the Budget pension reforms.
The focus of this report is on Self-Invested Personal Pensions, which are generally defined as personal pensions where the consumer has a wider breadth of choice around the investment options than a normal personal pension.
As SIPPs have traditionally been targeted towards the more affluent investors with higher levels of retirement savings than average, the wealth target market used in Mintel’s consumer research for this report is defined as those with investable assets of at least £50,000 or gross annual household income of at least £100,000.
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