Both Alliance Trust and Pointon York remain active in the Sipp market, but it is highly likely that companies will use the regulatory change as an opportunity to assess which products they wish to focus on.
Others will look to sell if they cannot meet the capital requirements. But it may not be so simple. “Consolidation is not inevitable as there may be a lack of buyers,” says Andy Bowsher, director of Sipps at Xafinity. “Only those providers with the very best operating efficiencies and technical capability – and with access to capital, of course – will be interested. There has been a number of providers looking to sell themselves over the past couple of years and without success.”
Lisa Webster, senior technical consultant at Hornbuckle Mitchell, agrees. “The question remains who will want to buy these books of business, especially in cases where the due diligence on the investments has not been as stringent as with some of the bigger operators,” she says.
Tally up
Despite the ructions in the market, business is broadly up, according to Table 2. The total number of Sipps set up in the past 12 months has risen by 29,668 since our last survey, reaching 120,000. However, the numbers include data from Aegon, which did not provide figures in the previous survey, making the rise more in the region of 15,000.
According to those who provided a figure, the average amount of new business from transfers is 78 per cent. The amount of true new business is therefore much lower than the figures quoted.
The total value of Sipps in force is also showing a positive trend. The £103.2bn total value in force is up 16.5 per cent on the previous survey. Changes in participants have an impact so figures cannot be directly compared like-for-like, but this survey shows a net increase of only three plans.
Another way to measure market growth is to look at the companies that responded to this survey and the previous one. Here the data is even more impressive, showing 21 per cent growth.
Our survey only captures part of the market. Suffolk Life collates data from various industry sources showing its estimates of total growth across the market, demonstrated by Chart 2. Its key findings are that more than one million Sipps are in existence split across the three types:
• 270,000 in simple/platform Sipps, with total assets of £23.5bn and average plan size of £87,000;
• 581,000 mid-range Sipps, with total assets of £46.1bn and average plan size of £79,000;
