SIPPs - UK - December 2016
“The SIPP market is increasingly diverging into two separate areas: lower-cost and lower-value platform SIPPs and full-range bespoke SIPPs. Despite the many challenges ahead, there is a place for both plan types. Bespoke providers will have to hold greater levels of capital, and yet more of them may be forced out of the market. But those who remain and employ stringent due diligence processes should be stronger as a result, contributing to a leaner and fitter marketplace.”
– Sarah Hitchcock, Senior Analyst – Financial Services
This report discusses the following key topics:
- Good prospects for future growth, but still many challenges ahead
- Opportunities abound in the decumulation market
For the purposes of this Report, Mintel uses the following definitions:
A self-invested personal pension (SIPP) is a type of defined-contribution personal pension that gives the investor greater flexibility and control over investment choice. Since its inception in 1989, the product has evolved to the point where there are now broadly two main product types, catering for different markets. These are:
- Streamlined/platform SIPP offers investors access to a range of standard investments, such as equities, cash, collective investments and bonds, but which usually require the investor to use the ‘in-house’ share trading service or platform. They include lower-cost, simplified SIPPs (which typically have a low or no minimum investment) and mid-range collective SIPPs, which tend to be offered by insurance companies.
- Full-range/bespoke SIPP is a SIPP in its purest form, allowing the widest choice of investments – including commercial property and more esoteric investment types such as derivatives – to be bought and held via a full range of investment counterparties. Full-range SIPPs tend to have higher administration charges and usually require a minimum investment of £50,000. Consequently, they are often taken out by the mass affluent, affluent and the high net worth (HNW), through the advised channel. They also tend to be run off platform, so may be referred to as non-platform based SIPPs.
SIPPs may also be categorised according to how they are legally structured, ie whether they are insured products (provided by insurance companies and established by deed poll) or non-insured products (written under trust). At least three fifths of all SIPPs in force are estimated to be non-insured.
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