Table of Contents
Introduction
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- Abbreviations
- Definitions
Executive Summary
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- The market
- The SIPPs market can overcome minor bumps in the road
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- Figure 1: SIPPs value forecast, by new premium sales, 2006-16
- Market factors
- The pensions market is facing some challenging times
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- Figure 2: Life expectancy at age 50 and 65, by gender, 1981-2058 (actual and projected)
- Market share
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- Figure 3: Top SIPP providers, by value of in-force business, September 2011
- The consumer
- Savings and Investment values
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- Figure 4: Value of savings and investments, July 2011
- Financial advice usage
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- Figure 5: Financial advice, July 2011
- Money management
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- Figure 6: Money management, July 2011
- SIPP recognition is not widespread
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- Figure 7: SIPP Recognition, July 2011
- Pension investment control
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- Figure 8: Pension investment control, July 2011
- Preferences in financial management company attributes
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- Figure 9: Preferences in financial management company attributes, July 2011
- What we think
Issues in the Market
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- How will changes to tax relief impact on SIPPs?
- Can the SIPPs market continue to flourish?
- What impact will fees have on SIPPs?
- How big an influence will other factors besides supplier control have?
- Will flexible drawdown increase SIPP business levels?
Future Opportunities
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- Turbulent financial times make flexibility an important feature
- Taking the long-term, cautious view could pay dividends when it comes to pensions
Internal Market Environment
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- Key points
- What are the main growth drivers of SIPPs?
- Lower income groups looking to SIPPs
- Global debt crisis impacting on SIPPs funds
- How will the RDR impact on SIPPs?
- FSA Platform Policy Paper – SIPP platform changes
- Low interest rates putting the squeeze on SIPP providers
- Changing pension landscape
- Government impact on pension savings
- Government intervention is the greatest threat to the pensions industry
- Supplier consolidation could see smaller firms priced out of the market
- Junior SIPPs
- Esoteric assets to cause problems for SIPPs providers
- Flexible drawdown forms around one fifth of the SIPPs market
Broader Market Environment
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- Key points
- People are living for longer than ever before – disaster for the pensions industry unless the retirement age is increased
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- Figure 10: Life expectancy at age 50 and 65, by gender, 1981-2058 (actual and projected)
- Higher-rate taxpayer numbers growing – this is good news for SIPPs providers
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- Figure 11: Total number of taxpayers and number on higher rate, 1990/91-2011/12
- Women are set to face a retirement on a very tight budget
- Frozen salaries and rising cost of living puts a squeeze on savings
- The eurozone crisis is doing nothing to help calm investment fears
- Stock markets remain turbulent
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- Figure 12: FTSE 100 and FTSE All Share – daily index movements, September 2001-September 2011
- Savers facing a challenging environment
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- Figure 13: Average annual changes in the Bank of England base rate, CPI and RPI – UK, 2001-10
- Pensions deficit
Competitive Context
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- Key points
- SIPPs proving to be the most popular personal pension option
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- Figure 14: Number of new individual pension contracts, by product type, 2005-10
- SIPPs see good growth in the new single premium market
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- Figure 15: Value of new individual pension business, by product type, 2005-10
- SSASs’ competitive position relative to SIPPs diminishing
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- Figure 16: Value of new EPP and SSAS business, 2005-10
Strengths and Weaknesses in the Market
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- Figure 17: SWOT Analysis
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Who’s Innovating?
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- Key points
- Corporate Wrap from Hargreaves Lansdown alternative to company pensions
- Deposit account offering from Leeds Building Society
- Torquil Clark offer ‘TQ Active Money’ service
- Flexible drawdown option from Axa
- Pointon York offers SIPPs compliant with Sharia laws to attract British Muslim investors
- No annual management charge SIPP from JPJShare.com
- LV= partnership with Barclays Stockbrokers allows greater market access
- Phased drawdown from Aviva
- Carbon-neutral SIPP from Pointon York
Market Size and Forecast
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- Key points
- SIPP market continues to expand
- Volume of SIPP business on the increase but volume levels fall
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- Figure 18: Volume and value of new SIPP business, 2006-11
- Mintel forecasts tempered growth in the SIPP market
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- Figure 19: SIPPs value market forecast, by new premium sales, 2006-16
- Forecast methodology
Market Segmentation
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- Key points
- Non-insured market is seeing the insured sector through a tough year
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- Figure 20: Value and volume of new SIPP business, segmented, by insured and non-insured business, 2008-11
- Average insured premium levels coming into line with average non-insured
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- Figure 21: Average new premium, segmented, by insured and non-insured business, 2008-11
- Transfer rates similar in insured and non-insured sectors
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- Figure 22: Value of SIPP transfers and share of total single premiums, 2008-11
Market Share
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- Key points
- Market Ccnsolidation
- Outsourcing of SIPP administration growing
- Standard Life retains position as largest SIPP provider
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- Figure 23: Largest 12 SIPP providers, by value of in-force business, 2011 (mid-year)
Companies and Products
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- Standard Life
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- Figure 24: Key financial data for Standard Life UK, H1 2010-H1 2011
- James Hay Partnership
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- Figure 25: Key financial data for James Hay Holdings Ltd, 2009-10
- AEGON UK
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- Figure 26: Key financial data for AEGON UK plc, 2009-10
- A J Bell
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- Figure 27: Key financial data for AJ Bell Holdings Ltd, H1 2010-H1 2011
- Hargreaves Lansdown
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- Figure 28: Key financial data for Hargreaves Lansdown plc Group, 2010-11
- Suffolk Life
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- Figure 29: Key financial data for Suffolk Life Pensions, 2009-10
Channels to Market
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- Key points
- Regular premium SIPP sales up in all channels but intermediaries are still top
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- Figure 30: New regular-premium SIPPs, by sales channel, 2008-10
- IFAs sell the majority of new single premium SIPPs
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- Figure 31: New single-premium SIPPs, by sales channel, 2008-10
- Changes to SIPP platforms necessary to see the industry through the RDR
Brand Communication and Promotion
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- Key points
- Changes in the pensions advertising landscape
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- Figure 32: Total advertising expenditure on pensions and retirement income solutions, by sub-category, 2007-11
- Aviva tops the advertising spending charts
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- Figure 33: Top ten advertisers of pensions and retirement income solutions, 2009-11
- Internet and press advertising on the increase in 2011
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- Figure 34: Proportional distribution of adspend on pensions and retirement income solutions, by media type, 2009-11
Investment and Asset Ownership
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- Key points
- 15% of people have at least £50,000 in investible assets
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- Figure 35: Value of savings and investments, July 2011
- Some 4% of affluent investors already have a SIPP
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- Figure 36: Pension and investment asset ownership among affluent consumers, July 2011
- SIPP ownership highest amongst those with £250,000 or more to invest
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- Figure 37: Pension and investment asset ownership among affluent consumers, by value of savings and investments, July 2011
Financial Advice
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- Key points
- High street banks and IFAs are the most popular destinations for those looking for financial advice
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- Figure 38: Financial advice, July 2011
- Those with less to invest are more likely to take a DIY approach to financial advice
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- Figure 39: Financial advice, by value of savings and investments, July 2011
- Personal decision making the most popular form of money management
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- Figure 40: Money management, July 2011
SIPP Awareness
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- Key points
- Less than half of affluent people have heard of SIPPs
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- Figure 41: SIPP recognition, July 2011
- SIPP recognition higher among men
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- Figure 42: SIPP recognition, by gender, July 2011
- Young people have lower SIPP awareness
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- Figure 43: SIPP recognition, by age, July 2011
- ABs have greater SIPP recognition levels than other socio-economic groups
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- Figure 44: SIPP recognition, by socio-economic group, July 2011
- SIPP awareness is relatively constant across investible asset value
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- Figure 45: SIPP recognition, by value of savings and investments, July 2011
- Those who use the press for advice have the highest level of SIPP awareness
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- Figure 46: SIPP recognition, by financial advice, July 2011
- SIPP recognition higher with those who occasionally consult financial advisors
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- Figure 47: SIPP recognition, by money management, July 2011
Pension Investment Control
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- Key points
- 24% of respondents feel that they don’t need a lot of control over their pensions
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- Figure 48: Taking control of pension investments, July 2011
- Those with more to invest have a greater confidence in picking their own investments
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- Figure 49: Taking control of pension investments, by value of savings and investments, July 2011
- Personal and stakeholder pension owners are interested in pension consolidation
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- Figure 50: Taking control of pension investments, by most popular asset ownership, July 2011
- Those using press and the internet for financial advice don’t feel the need for a high level of pension control
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- Figure 51: Taking control of pension investments, by financial advice, July 2011
- Interest in pension consolidation higher with those who take professional financial advice
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- Figure 52: Taking control of pension investments, by money management, July 2011
- SIPP awareness higher amongst those who don’t want that level of control over their pensions
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- Figure 53: Taking control of pension investments, by SIPP recognition, July 2011
- Pension investment control by demographics
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- Figure 54: Pension investment control, by demographics, July 2011
Preferences in Company Attributes
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- Key points
- Well-informed staff tops the list of preferred finance company attributes
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- Figure 55: Financial management company choice, July 2011
- Access to financial advice a key attraction for those with less to invest
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- Figure 56: Financial management company choice, by value of savings and investments, July 2011
- Personal and stakeholder pension owners want flexibility and understanding from their financial services provider
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- Figure 57: Financial management company choice, by most popular asset ownership, by July 2011
- Respondents who use their bank and IFAs for advice value knowledgeable staff
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- Figure 58: Financial management company choice, by financial advice, July 2011
- Occasional users of professional advice want their financial position to be understood
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- Figure 59: Financial management company choice, by money management, July 2011
- Respondents with higher levels of SIPP awareness look for accessible named contacts from their financial managers
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- Figure 60: Financial management company choice, by SIPP recognition, July 2011
Appendix – Market Size and Forecast
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- SIPP Value
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- Figure 61: SIPP market value, by new premiums, 2011-16
Appendix – Investment and Asset Ownership
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- Figure 62: Most popular value of savings and investments, by demographics, July 2011
- Figure 63: Next most popular value of savings and investments, by demographics, July 2011
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- Figure 64: Most popular asset ownership, by demographics, July 2011
- Figure 65: Next most popular asset ownership, by demographics, July 2011
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Appendix – Financial Advice
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- Figure 66: Financial advice, by demographics, July 2011
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Appendix – SIPP Awareness
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- Figure 67: SIPP recognition, July 2011
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Appendix – Pension Investment Control
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- Figure 68: Taking control of pension investments, July 2011
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Appendix – Preferences in Company Attributes
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- Figure 69: Most popular financial management company choice, July 2011
- Figure 70: Next most popular financial management company choice, July 2011
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- Figure 71: Other financial management company choice, July 2011
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