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Distributing Self Invested Pensions in the UK, 2005
Market Briefing, July 2005, 1356  €


Description

IntroductionThis brief shows how self invested pensions are currently distributed.
Independent Financial Advisers (IFAs) are currently the dominant channel for selling these products.
However the market is set for major change following Pensions Simplification regulation in 2006, boosting sales and changing distribution patterns.ScopeThe brief analyses the market for Self Invested Personal Pensions (SIPPs) and Small Self Administered Schemes (SSASs)It sizes the total market and the insured element of the market and forecasts forward to 2009It segments the market by seven distribution channelsHighlightsPensions Simplification will have a positive impact on the self invested pensions market, increasing the market for SIPPs.
This will have a positive effect on distributors, increasing both the market size and the need for quality distribution and advice.IFAs are the dominant channel for distributing both SIPP and SSAS products distributing 65% and 63% of premiums respectively.
This reflects the domination by IFAs of pensions distribution in the UK more generally.
In 2004, individuals regulated as Independent Financial Advisers distributed more than 80% of pensions in the UK.Datamonitor believes that IFAs will see sales in SIPPs grow from below £1bn in 2004 to more than £2bn in 2009.
Increasing SIPP sales through the IFA channel will reflect the ability of IFAs to offer the kind of in-depth advice which will be required for New-Style SIPPs.Reasons to PurchaseAssess distribution strategies on the basis of the current distribution marketDevelop a forward looking distribution strategy on the basis of distribution forecastsUnderstand the challenges and opportunities which Pensions Simplification regulation offers individual distribution channels

Sommaire
 
TABLE OF CONTENTS
 
CHAPTER 1 DISTRIBUTING SELF INVESTED PENSIONS 7
 
Introduction 7
 
There are two key types of self invested pensions 8
 
SIPPs 8
 
SSASs 8
 
IFAs are the key distributors of self invested pensions at present 8
 
IFAs are the dominant distributors of self invested pensions 8
 
Independent financial advisers are domoninant in the sale of both insured SIPPs and SSASs 9
 
Simplification will have positive implications for self invested pensions 11
 
Simplification is a major regulatory change 11
 
Simplification will encourage wealthy customers to save through self invested pensions 12
 
SIPPs will grow rapidly following Simplification 13
 
Simplification will drive new business for distributors in a number of ways 14
 
Complex regulation requires expert advice 14
 
Greater freedom of allocation and vesting requires ongoing advice 15
 
Asset under management fee structures will benefit distributors in the longer term 16
 
New Style SIPP distribution will diversify while IFAs will continue to dominate the New Style SSAS market 17
 
A wide range of channels will benefit from the growth in SIPPs 19
 
IFAs will continue to be the most important channel for SIPP and SSAS distribution 19
 
Multi-tie advisers will take a share of SIPP distribution 23
 
Private banks have a major opportunity through Simplification 24
 
Stockbrokers will launch low-cost SIPPs 27
 
Group SIPPs offer Employee Benefits Consultants (EBCs) a way back into the self invested pensions market 27
 
Online SIPPs will see major growth in volumes 29
 
Universal Bank’s will have all the capabilities needed for a strong self invested pensions offering 31
 
Over the counter sales will become a smaller niche in the SIPP market 32
 
Action Points: Action is needed now to take advantage of Simplification 33
 
CHAPTER 2 APPENDIX 35
 
Supplementary data 35
 
Definitions 38
 
Research methodology 42
 
Distribution forecasting model 42
 
Datamonitor’s Life and Penisions Forecasting model 43
 
Specialist pensions new business total premiums held by insurance companies are hard figures taken from the ABI. See above for the definitions used by the ABI. 43
 
SPP writing team 43
 

 

 
LIST OF TABLES
 
Table 1: SIPP and SSAS new business premiums, split by distribution channel 2004e 35
 
Table 2: SIPP and SSAS new business premiums, split by distribution channel 2009f 36
 
Table 3: Specialist Pensions new business premiums held by insurance companies, 2004 36
 
Table 4: Which of the following specialist pension products do you currently sell? 37
 
Table 5: Over the next six months how do you expect sales in each of the following products to change? Converted to scores 37
 
Table 6: SIPP & New Style SIPP, New Business Total premiums by distribtion channel, 2004e-2009f 38
 
Table 7: SSAS & New Style SSAS, New Business Total premiums by distribtion channel, 2004e-2009f 38
 

 
LIST OF FIGURES
 
Figure 1: IFAs are the dominant distributors in the SIPP and SSAS markets, 2004 9
 
Figure 2: Distributors regulated as Independent financial advisers distribute almost 75% of insured SIPPs 2005 10
 
Figure 3: The insured SSAS market is very small and almost entirely distributed by Independent Financial Advisers, 2004 11
 
Figure 4: Wealthy customers can have more complex and differentiated pensions following Simplification 15
 
Figure 5: The distribution of SIPPs will be diversified as the SIPP market expands 2004-2009 17
 
Figure 6: SSAS distribution will continue to be led by IFAs 18
 
Figure 7: Which of the specialist pension products do you currently sell? 20
 
Figure 8: SIPPs are the pensions product that IFAs are most positive about, Spring 2005 21
 
Figure 9: IFA’s SIPP sales will grow by 17%, 2004-2009 22
 
Figure 10: Regulatory change will create a Multi-tied channel for SIPP distribution 24
 
Figure 11: Private banks will increasingly utilize new style SIPPs as part of their investment services 26
 
Figure 12: Group SIPPs will drive SIPP distribution through Benefits Consultants 29
 
Figure 13: The Internet will become a significant channel for SIPP sales 30
 
Figure 14: Retail banks will increase SIPP sales at the lower end of the market, 2004-2009 31
 
Figure 15: Over the counter sales will continue to play a significant role in the SIPP and SSAS markets 33
 

 
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