This figure shows the market has grown by 55% from £1.5bn in 2016.
Danielle Cripps, financial analyst at GlobalData, said it is further estimated the market will continue to grow by an average of £1.9bn ($2.5bn, €2.1bn) each year to 2020.
This growth is forecast despite Sipps potentially coming under tighter regulatory control in the near future, Cripps said.
“It seems the market may be on the cusp of undergoing a tighter regulatory regime following new capital adequacy requirements in 2016, which required Sipp providers to hold higher capital reserves when a greater proportion of their Sipps are invested in higher risk, non-standard assets.
“Tighter regulation is likely to impact how providers and advisers operate in the market. Despite this, the market is forecast to remain strong in size and to expand as the ageing population seeks to consolidate their pensions and take advantage of the freedoms,” she said.
Complaints on the rise
The report also found that the Sipp market, while growing, is suffering from a large number of complaints.
“According to the Financial Ombudsman Service’s (FOS) 2017/18 annual review there were 2,051 new complaints made about Sipps, which is a 37% rise year-on-year compared to the 1,493 made in the financial year 2016/17.
“They surround due diligence failings, where customers have been investing in inappropriate nonstandard funds or were mis-sold a Sipp, as well as unregulated firms and introducers. Scandal has also surrounded inappropriately defined benefit transfers,” Cripps said.
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