This year has not only seen the self-invested personal pension (Sipp) hit 25 years, but it has also seen the retirement space as a whole undergo a massive overhaul. Since chancellor George Osborne announced there should no longer be the need for retirees to own an annuity, the industry has turned to look at different pension options.
For the past few years, Sipp providers were waiting for the FCA to release news on its proposals for capital adequacy requirements. But on 4 August, the regulator announced it had set the requirements that Sipp operators will have to hold a minimum of £20,000. Although the change was not unexpected, the paper – which was originally due to be released in September 2013 – means the minimum requirement has risen drastically from the initial publication released in November 2012, which had proposed the minimum capital requirement each Sipp operator should hold at £5,000. The announcement was met with much debate, as anticipated.
Mike Morrison, head of platform marketing at AJ Bell, says, “It is pleasing to finally get the capital adequacy rules but they are still confusing. There have been commentators suggesting that assets under management is not the right measure and it is confusing around the definition of standard and non-standard investments and particularly around commercial property which becomes non-standard if it cannot be sold in 30 days. This would have been the ideal time to launch a permitted investment list.”
As expected this year, the Sipp industry has already seen some consolidation. Mattioli Woods subsidiary City Pensions has acquired the pensions administration business from a subsidiary of Ashcourt Rowan, UK Wealth Management, for £355,000. This came just a few days after Dentons Pension Management announced it had acquired the Sipp book from MAB Pensions for an undisclosed sum.
This year’s survey covers a total of 72 plans and 50 providers. Notable absentee Friends Life says it does not currently have an individual Sipp open to new business so the survey is no longer relevant, while other no-shows cite lack of resource and time in order to complete the survey.
Platform availability
Looking at Table 1 gives an overview of all providers who participated in the survey, and their available plans. The Table also looks at whether the providers are available on platforms and notably, the survey has changed slightly in defining the type of Sipp. Previously, respondents had been asked to categorise their Sipps by simple, mid- and full-range, but in preparation for any market splits in the next year, this has been changed to ask whether Sipps are platform-integrated or independent open architecture.
As Chart 1 shows, 79 per cent of all Sipps classify themselves as open architecture, with the rest – 33 per cent, or 15 plans – defined as platform integrated.
Availability on a platform is one aspect of Sipps that many advisers may be looking at in the future, if only to make it easier to access your Sipp. But 21 plans still do not have a link to any platform – 30 per cent of the survey respondents. In the run up to the upheaval the pensions industry will see in April 2015, being available on a platform is one element that providers will need to look into, particularly as platforms grow in size and as the control associated with Sipps now offered by platforms develops.
