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UK Personal Pensions and Sipps market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Personal Pensions and SIPPs market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

The main focus of this report is on individual personal pensions, individual stakeholder pensions and individual SIPPs. Group personal pensions (GPPs), group SIPPs and employer-sponsored stakeholder pensions fall under the category of workplace pensions and are covered in a separate report.

For the purposes of this report, Mintel has used the following definitions:

  • Personal pension – a DC (defined-contribution) pension scheme, set up as a contract between the individual member and the pension provider (usually an insurance company or investment platform). An employer may contribute to a member’s personal pension. Other people are also able to contribute.
  • Stakeholder pension – a type of low-cost personal pension which must adhere to certain conditions set by the government. Such as the requirement the AMC (annual management charge) must not be more than 1.5% per year for the first 10 years of membership and thereafter not more than 1%.
  • SIPP – a type of personal pension, which offers individual investors greater flexibility and investment choice. There are two main sub-categories, catering for different markets: streamlined SIPPs, which mainly comprise lower-cost, simplified platform-based SIPPs and mid-range collective SIPPs; and full-range 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). More than half of all SIPPs in force are estimated to be non-insured.

Expert analysis from a specialist in the field

Written by Sarah Hitchcock, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

“Looking ahead, the SIPP and flexible personal pension markets are likely to continue to expand, and increasingly converge, as factors such as the freedom rules and the Pensions Dashboard help to maintain high levels of demand for pension consolidation and flexible retirement solutions.” Sarah Hitchcock
Senior Financial Services Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • 12 million individual pensions in force
              • New premium business set to grow strongly over next five years
                • Figure 1: Forecast of new individual pension business – fan chart, 2013-23
              • Transfers are the main growth driver
                • Figure 2: Transfers as a share of total new individual pension premiums, by product type, 2014-17
              • Direct sales more common in the individual stakeholder pension market
                • Auto-enrolment indirectly benefits individual pension providers
                  • FCA investigates competition in the market for ‘non-workplace’ pensions and introduces new rules for pension transfers
                    • Companies and brands
                      • A heavily consolidated market
                        • SIPP market is more fragmented
                          • Recent M&A activity
                            • More companies launch low-cost platform SIPPs
                              • The consumer
                                • Scope to improve take-up among the self-employed
                                  • Figure 3: Ownership of private pensions, by all adults and selected working status groups, September 2018
                                • Many people have more than one pension
                                  • Figure 4: Number of pension pots owned, September 2018
                                • Contributions need to be considered in the context of overall retirement saving
                                  • Figure 5: Amount contributing to individual pension per month, September 2018
                                • Significant interest in online account management
                                  • Figure 6: Proportion of individual pension savers who receive, or are interested in receiving, online account access/management services, product information and other tools and services, September 2018
                                • Good prospects for pension transfers…
                                  • Figure 7: Likelihood of undertaking of key pension-related activity within the next three years, September 2018
                                • …and for future market expansion
                                  • Figure 8: Proportion of adults who would consider getting an individual pension in the future, September 2018
                                • Many pension savers are drawn to the benefits of a SIPP
                                  • Figure 9: Reasons for considering transferring pension assets into a SIPP, by type of pension, September 2018
                                • What we think
                                • Issues and Insights

                                  • The market for SIPPs and flexible personal pensions will continue to grow and converge
                                    • The facts
                                      • The implications
                                        • Significant latent demand among the self-employed
                                          • The facts
                                            • The implications
                                              • Potential to grow the children’s pension market
                                                • The facts
                                                  • The implications
                                                  • The Market – What You Need to Know

                                                    • Nearly 12 million individual pensions in force
                                                      • Transfers drive new business growth
                                                        • Direct sales more common in the individual stakeholder pension market
                                                          • Auto-enrolment indirectly benefits individual pension providers
                                                            • FCA investigates competition in the market for ‘non-workplace’ pension
                                                            • Market Size and Forecast

                                                              • Workplace auto-enrolment and consolidation activity have led to fall in the number of in-force individual pensions
                                                                • Figure 10: Individual pension business in force, by product type, 2017
                                                              • SIPPs continue to see growth
                                                                • Strong rise in new individual pension premiums fuelled by transfers
                                                                  • Figure 11: New individual pension business, 2014-18
                                                                • Five-year market forecast
                                                                  • Figure 12: Forecast of new individual pension business – fan chart, 2013-23
                                                                  • Figure 13: Forecast of new individual pension business, 2018-23
                                                                • A cautionary note
                                                                  • Forecast methodology
                                                                  • Market Segmentation

                                                                    • Significant product crossover
                                                                      • Stakeholder pensions remain a niche area
                                                                        • Figure 14: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2014-18
                                                                        • Figure 15: Value of new individual personal pension, stakeholder pension and insured SIPP business, 2014-18
                                                                      • Transfers account for most new individual pension business
                                                                        • Figure 16: Transfers as a share of new individual pension business, by product type, 2014-17
                                                                      • Total regulated SIPP sales reached nearly 1 million in 2017
                                                                        • Figure 17: Number of regulated SIPP, personal pension and stakeholder pension sales, 2013-17
                                                                    • Channels to Market

                                                                      • Most new personal pension premiums are generated via IFAs
                                                                        • Figure 18: New individual personal pension business, by sales channel, 2014-17
                                                                      • Non-advised sales are more common in the stakeholder pension market
                                                                        • Figure 19: New individual stakeholder pension business, by sales channel, 2014-17
                                                                      • Most insured SIPP sales are also transacted through advisers
                                                                        • Figure 20: New individual insured SIPP business, by sales channel, 2014-17
                                                                      • Intermediary definitions
                                                                      • Market Drivers

                                                                        • DC pension pool boosted by auto-enrolment
                                                                          • Figure 21: Number of individual and work-based pensions in force and number of occupational DC members, 2012-17
                                                                        • Uncertain economic backdrop linked to Brexit could dampen demand for investing in the short term
                                                                          • Regulatory changes have boosted opportunities for the pension industry
                                                                            • Pensions Dashboard requires government backing
                                                                            • Recent Regulatory Developments

                                                                              • New rules to improve pension transfer advance
                                                                                • Regulator investigates competitiveness of the individual pension market
                                                                                  • Chancellor resists tinkering further with pension tax relief
                                                                                    • Latest review of auto-enrolment regime shifts focus towards the self-employed
                                                                                      • 1% charge cap on early exit fees
                                                                                      • Companies and Brands – What You Need to Know

                                                                                        • A heavily consolidated market
                                                                                          • SIPP market is more fragmented
                                                                                            • Acquisitions and disposals
                                                                                              • More companies launch low-cost platform SIPPs
                                                                                              • Provider Rankings

                                                                                                • Royal London was promoted to the top spot in 2017, ahead of Aviva
                                                                                                  • Figure 22: Rankings of top 10 providers of insurance-administered individual and group pension business, by total gross premium income, 2017
                                                                                                • Scottish Widows could move back up the rankings with acquisition of Zurich’s workplace pension business
                                                                                                  • Notable omissions: Aegon and Legal & General
                                                                                                    • Standard Life, AJ Bell and Hargreaves Lansdown are among the largest SIPP providers
                                                                                                    • Competitive Strategies

                                                                                                      • M&A activity
                                                                                                        • Aegon’s acquisition of Cofunds creates the largest intermediary platform
                                                                                                          • Embark buys Liberty SIPP’s pension assets
                                                                                                            • Strategic developments
                                                                                                              • Legal & General sells its life and pensions business to Swiss Re subsidiary
                                                                                                                • Curtis Banks unveils new branding and plans for a new SIPP
                                                                                                                  • Prudential ditches Flexible Retirement Plan as its Retirement Account continues to draw in most new business
                                                                                                                    • New product launches
                                                                                                                      • Goji launches low-cost platform SIPP
                                                                                                                        • DP Pensions launches single-investment SIPP
                                                                                                                          • Moneyfarm launches a digital SIPP
                                                                                                                            • Robo-adviser launches digital pension with access to a human adviser
                                                                                                                            • Advertising and Marketing Activity

                                                                                                                              • Trivial amount invested in above-the-line advertising
                                                                                                                                • Fisher Investment uses digital advertising to promote its 15-minute Retirement Plan
                                                                                                                                  • Figure 23: Total above-the-line, online display and direct mail advertising expenditure on pension products and advice, 2013/14-2017/18
                                                                                                                                • Nielsen Ad Intel coverage
                                                                                                                                • The Consumer – What You Need to Know

                                                                                                                                  • Scope to improve take-up among the self-employed
                                                                                                                                    • Many people have more than one pension
                                                                                                                                      • Contributions need to be considered in the context of overall retirement saving
                                                                                                                                        • Significant interest in online account management
                                                                                                                                          • Pension transfer activity set to remain strong
                                                                                                                                            • Good prospects for future growth
                                                                                                                                            • Ownership of Pensions and Other Retirement Savings

                                                                                                                                              • A third of the UK’s adult population have an individual pension
                                                                                                                                                • Figure 24: Type of pension owned, September 2018
                                                                                                                                              • Self-employed are more likely to have an individual pension, but have a low overall take-up
                                                                                                                                                • 12% of adults don’t know if they have an individual or workplace pension
                                                                                                                                                  • More than half of all pension savers have at least two separate pension pots
                                                                                                                                                    • Figure 25: Number of pension pots owned, by type of pension, September 2018
                                                                                                                                                  • Many adults are also saving for their retirement outside a pension
                                                                                                                                                    • Figure 26: Ownership of other (non-pension) retirement savings, by all adults, pension savers and non-pension savers, September 2018
                                                                                                                                                • Pension Contributions

                                                                                                                                                  • Three quarters of individual pension savers are making regular contributions
                                                                                                                                                    • Figure 27: Amount contributing to individual pension per month, by type of pension, September 2018
                                                                                                                                                  • Those with a stakeholder pension are most likely to making regular contributions
                                                                                                                                                  • Pension Access and Management

                                                                                                                                                    • 52% of individual pension savers have online access to their pension…
                                                                                                                                                      • Figure 28: Proportion of individual pension savers who receive, or are interested in receiving, online account access/management services, product information and other tools and services, September 2018
                                                                                                                                                    • …but only 38% have full account management capability
                                                                                                                                                      • Figure 29: Interest in provider offering online account access/management services, product information and other tools and services, by type of pension, September 2018
                                                                                                                                                  • Pension Transfer, Fund Switching and Decumulation Plans

                                                                                                                                                    • Many individual pension savers have plans to switch or transfer funds within the next three years…
                                                                                                                                                      • Figure 30: Likelihood of undertaking of key pension-related activity within the next three years, September 2018
                                                                                                                                                    • …underpinning the need for expert advice
                                                                                                                                                      • 29% of individual pension savers expect to consider changing platform or provider
                                                                                                                                                        • Around one in five individual pension savers aged 52+ are planning to make a withdrawal within the next three years
                                                                                                                                                          • Figure 31: Likelihood of undertaking decumulation-related activity within the next three years, September 2018
                                                                                                                                                      • New Business Opportunities

                                                                                                                                                        • 11% of adults would consider opening an individual pension for a child
                                                                                                                                                          • Figure 32: Proportion of adults who would consider getting an individual pension in the future, September 2018
                                                                                                                                                        • The benefits of a SIPP are attractive to many
                                                                                                                                                          • Figure 33: Reasons for considering transferring pension assets into a SIPP, by type of pension, September 2018
                                                                                                                                                        • 31% of all pension savers would consider transferring into a SIPP if it meant lower charges
                                                                                                                                                        • Appendix – Abbreviations and Data Sources

                                                                                                                                                          • Abbreviations
                                                                                                                                                            • Consumer research methodology
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                              • Total market forecast – best- and worst-case scenarios
                                                                                                                                                                • Figure 34: Forecast of individual pension premiums – best- and worst-case scenarios, 2018-23
                                                                                                                                                              • Regular-premium sector
                                                                                                                                                                • Figure 35: Forecast of new regular-premium individual personal and stakeholder pension business – fan chart, 2013-23
                                                                                                                                                                • Figure 36: Forecast of individual personal and stakeholder pension regular premiums – best- and worst-case scenarios, 2018-23
                                                                                                                                                              • Single-premium sector
                                                                                                                                                                • Figure 37: Forecast of new single-premium individual personal and stakeholder pension business – fan chart, 2013-23
                                                                                                                                                                • Figure 38: Forecast of individual personal and stakeholder pension single premiums – best- and worst-case scenarios, 2018-23
                                                                                                                                                              • Forecast methodology