Sipp providers need to hold more capital reserves

SIPP Providers Need to Demonstrate Capital Adequacy

This September we are seeing implementation by the FCA of SIPP Providers having to demonstrate capital adequacy in their books in order for them to continue to offer the SIPP proposition.  This article looks into this requirement in a little more detail and comments on some of the likely implications.

What Does Capital Adequacy Mean?

Put simply, this means many SIPP providers of all sizes will have to hold more capital in reserve.  This additional capital will have to come from somewhere, and if a provider cannot get hold of the required funds easily then they will have to generate it by other means, and the most likely source will be to increase client fees, or perhaps not to pass on some of the bank interest paid by clients’ SIPP current accounts.

What Is Happening as a Result of this Change?

We have already seen a consolidation in the SIPP provider market and this is going to continue, not least because those SIPP providers who are trading on very thin margins may struggle to raise enough extra cash quickly enough – and could be driven out of business.

If Members of SIPPs are worried about what is happening to the market, and finding that their SIPP Trustee is more remote than they would like it to be, then talk to us about converting to a SSAS with Pensions Management Limited.

The differences between a SSAS and a SIPP are summarised in this article  whilst clicking here will take you to a case study were we did convert a SSAS into a SIPP.

Here at Pensions Management we specialise in Small Self-Administered Schemes (SSAS), providing expert service and advice for the setting up and running of SSASs for clients of all sizes, but especially owners/directors of small companies.

We pride ourselves in working very closely with SSAS Members and their Companies.  Contact us or call us on 0121 693 0690 for help and advice on SSAS.


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