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20 Mar 2013

SIPP Market Grows 35% Since 2006

The self-invested personal pensions (SIPPs) market has expanded by 35% since the scheme´s rollout in 2006 and 200,000 new SIPPs are sold each year after the introduction of the new pension rules that came into force on “A-Day,” according to MoretoSIPPS´ head John Moret.

As of 1 January 2013, the number of SIPPs used in the country was 1.029 million, in which Britons have invested a combined £122 billion, he said on the sidelines of the 2013 Henry Stewart conference on SIPPs and Retirement Options. Moret predicted that by 2018 the number of SIPPs could hit 1.5 million, despite recent action by the financial regulator implying that the number of providers could be potentially reduced, as well as the recent slowdown in SIPPs growth rate, IFA Online reported.

The delay could be in part attributed to the “regulatory tsunami” that impedes the work of specialist providers. According to Moret, regulation is the area that needs to be addressed, particularly proposals related to introducing higher capital adequacy requirements for SIPP providers. He considers that the base for new capital rules should be the number of SIPPs administered rather than assets under management, as SIPPs hold assets that cannot be reconciled within an acceptable period of time. Moret is also proposing a levy of an additional charge on overseas assets, as well as introducing a minimum capital requirement of £50,000.

Despite the changes, the SIPP market will likely see a number of growth opportunities, taking advantage of consumers´ growing interest in income drawdown as an alternative to annuities, which means shifting to a SIPP.

Copyright © M2 Bespoke 2013

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