Article by Phil
The value of SIPP (Self Invested Personal Pensions) advice is set to soar in the UK over the next 5 years, according to speakers at the recent Association of Member Directed Pension Schemes (AMPS) Conference.
The SIPP advice market is currently worth £500 billion in the UK but is predicted to grow to £750 billion in value by 2030. The growth is expected come as a result of a combination of factors including:
- Improvements in technology making the access to SIPP’s easier for a wider market.
- Growth in pension contributions by the self-employed market.
- The pension dashboard being launched which should allow people to find their lost pensions and transfer their pensions more easily.
- The introduction of potential new “Pot for Life” rules which will allow better and more pension consolidation in one place with one provider.
It would benefit people’s retirement plans if more people took professional SIPP advice. Currently less than 60% of people with a SIPP use a financial adviser. That equates to 3 million people who don’t have a SIPP adviser. All the major names in financial services provide SIPP’s but there are also a multitude of much smaller SIPP providers. Some offering high risk investments. Sometimes these types of SIPP provider can get into trouble and go under. So, please take SIPP advice from a regulated financial adviser.
You might also want to look at the reputation of some SIPP providers. Ciytwire have found out that a number of big-name providers are still using manual pension transfer processes which cause serious delays for customers. Often these require wet ink signatures from customers. This is despite there being at least four major electronic pension transfer processing systems in the market. People often don’t think about the way firms operate when choosing a service, but it is very important. Financial Advisers providing SIPP advice understand this. Some of the worst offenders according to Citywire include:
Aberdeen (Abrdn), A J Bell, Aegon, James Hay, Embark, Standard Life and Barnett Waddingham.
According to Pension Bee, 15% of people thought that a pension pot of £150,000 would be sufficient for a comfortable retirement, whilst 50% thought they would need £250,000. Most people thought an income of between £15,000 and £30,000 would be enough for their retirement. But 45% said they didn’t feel that they were on track with their plans.
Interestingly, improving SIPP advice and the wider pension landscape could be a vote winner.
According to research by TPT Retirement Solutions, nearly 90% of people want the next government to do more to help them save for their retirement. Three quarters said they would vote for a party who would help them save.
- 96% of people support increasing minimum auto enrolment contributions and expanding the scope.
- Nearly 50% want the next government to maintain the triple lock.
- 60% want simpler pension options at retirement.
- 55% would like a pension pot for life so all their pensions were in one place.
- Nearly half of voters want the Lifetime allowance to be abolished.
Pensions are clearly close to people’s hearts and minds. I wonder how many politicians think this is important. Although it’s clear that lots of people don’t understand pensions at all. According to My Pensions expert 25% of over 40’s don’t know what the “triple lock” is at all. 65% couldn’t identify all the factors involved in the calculation. (inflation, average wage growth or 2.5%, whichever is the higher). Like TPT’s research, over 50% thought the SIPP advice and general pension advice system was too complicated.
In other research by Nucleus (reported in the FT Adviser 6/6/24) three quarters of people think that state pension will be less than it is now, or even won’t exist by the time they retire. This is people between 35 and 54. So some 54-year-olds think that there might not even be a state pension in the next 12 years. That seems doubtful but is further evidence of the lack of confidence in the current pension system.
