If you are a customer interested in our services and want to know how we can support you, visit the InvestAcc Pension Administration or Vesta Wealth website.
In 2023, 57% of UK mortgaged first-time buyers received support from their family members. This support is expected to total £30 billion between 2024 and 2027.
On a global basis, it is expected that $18.3 trillion in combined wealth will transfer between generations by 2030, with approximately £7 trillion transferring in the UK.
In 2023 there were 21 million people aged 55 and over in the UK, and the number of people aged 65 to 79 is predicted to increase by 30% to over 10 million in the next 40 years.
The value of UK household wealth was estimated at £10.9 trillion in 2023, with 42% concentrated in pension assets. In 2020, average UK household wealth for those aged 55 to 64 was nine times higher than for those aged 25 to 34.
The defined benefit (DB) market is largely closed, with only 9 per cent. of DB schemes in the UK open to new entrants at 31 March 2023. This has been mirrored by greater penetration of defined contribution (DC) schemes in the workplace, accelerated by regulatory reforms such as the introduction of auto-enrolment by the Pensions Act 2008.
Since the Pension Freedom reforms in 2015 brought an end to compulsory annuitisation, many individuals are seeking greater flexibility to withdraw their retirement savings through alternate benefit options such as Drawdown.
The UK SIPP market in 2023 accounted for c.£500 billion of AuA, comprising an estimated 20 per cent. of total UK pension assets. SIPPs are a large tax wrapper category for platform providers, exceeding individual savings accounts (ISA) and general investment accounts (GIA) in size, accounting for 45 per cent. of platform AuA. Measured by the number of plans, the overall UK SIPP market grew on average: (i) by 22 per cent. from 2000 to 2020, and (ii) by 18 per cent. from 2020 to 2024.
Income for SIPP administrators falls under three headings:
SIPP administration fees are typically paid annually in advance, resulting in a cash positive working capital cycle. Earnings quality is high, given predictable and recurring core revenues, dominated by annual fees. Strong business fundamentals generate sustainable EBITDA with industry average margins in excess of 30% and c.90% cashflow conversion. A SIPP administrator’s business model is generally insensitive to underlying market performance.
Customer retention rates across the industry exceed 90 per cent., and the average customer lifetime exceeds 25 years. Fees may even extend beyond savers’ lifetimes if SIPPs are passed onto plan holders’ heirs.
The SIPP market is regulated by the FCA, under a regulatory environment that is typically dominated by conduct rather than capital issues, and this conduct risk is generally borne primarily by advisers rather than product providers. The Directors believe that the SIPP market offers an attractive way to participate in the pensions growth dynamic, without the regulatory capital risks which dominate investment in pensions through the insurance or pensions risk transfer providers.
The top five administrators account for 46% of total assets under administration (AuA) and 40% of total plans, and the market leader has just 12% of total AuA.
Many SIPP administrators were set up by pensions entrepreneurs after the advent of SIPPs in the 1990s. This means that a generation of founders of small and medium sized specialist SIPP administrators are now considering exit opportunity plans and may therefore be open to a sale.
The introduction and implementation of Consumer Duty in 2023 has created a push for higher levels of consumer care, of which in many cases small to medium size vendors are unable to uphold, driving UK SIPP sector to actively consolidate.
The business benefits from being a multi award-winning UK personal pension administrator, having a proven track record of delivering exceptional customer service, scalable operations and infrastructure, a strong financial profile and a sustainable organic growth trajectory.
The Group management team has extensive experience in the financial services and wealth sector and have led multiple successful transactions, with particular experience in the pensions market. The team has a clear playbook for value creation through M&A and are in are in regular dialogue with vendors and their advisers, often on a bilateral rather than competitive basis.
By embedding this principle across the Group, we are building a scalable and resilient business that creates long-term value while driving sustainable growth and sets a benchmark for excellence in UK specialist pension administration.
