Market to see 5 million sipps by 2020

Several pensions experts have again highlighted the potential for Sipps to become a ‘mainstream’ product on the back of pension reform.

Chairing the annual Henry Stewart SIPP Conference last week, John Moret believes five million SIPPs in the market by 2020 is a realistic forecast.

"It is an exciting time for the world of SIPPs and most of us are probably pinching ourselves at the explosion of interest in the SIPP market"

Exciting times ahead for SIPPs

He says: “It is an exciting time for the world of SIPPs and most of us are probably pinching ourselves at the explosion of interest in the SIPP market.

My prophecy of half million SIPPs by 2010 would now to turn out to be a dramatic underestimate if, as I believe, the sipp or its successor, the open architecture pension (OAP), becomes the only great alternative to an employer-sponsored scheme.”

Moret who is director of sales and marketing at Suffolk Life however, cautions concern for providers and administrators within this new regime over scaleable IT platforms on which to deliver a creditable service.

He says: “There is a real risk that many current providers particularly some insurance companies, will struggle to create a credible pension proposition. They will lose out to some of the established SIPP and wrap administrators and to new entrants such as banks and investment houses.”

Bruce Moss, principal at Tillinghast Towers Perrin , supports Moret’s views, pointing to the figure of five million as quite easily attainable.

Also speaking at the conference in London, Moss says the flexibility and opportunity for buying sipps will prove a strong drawcard for the likes of executives in a wider programme wanting to manage their own funds.

He warns, however, under the FSA, this wider degree of flexibility and choice comes with a warning of doing the wrong thing, adding self-management can become quite 'onerous'.

Moreover, he believes the coverage of sipps in residential property by media and the market is too prominent, given it is only a small part of a much larger scope.

Moss also recognises the changing nature of the tax regime on 6 April 2006, where all pensions will fall under one umbrella, namely a Registered Pension Scheme.

Products including self invested personal pensions (sipps) will be bracketed within the registered pension scheme.

Both conclude new regime has the ability to restore confidence within the pensions industry, with Moret adding: “The next few years could provide extensive change in the value proposition from which at long last the consumer may benefit. This in turn may start to restore some confidence in the pension’s world - and not before time.”

SIPP article from IFAonline.co.uk