SIPP Platforms Sacrificing Client Returns by Overlooking Unit-Linked Structures, Mobius Report Finds

Quick Summary

SIPP platforms are currently eroding client net returns by failing to utilize unit-linked structures, according to a new report from Mobius. While the UK market holds £1.5 trillion in these assets, SIPP providers rely heavily on UCITS OEICs, leading to unnecessary tax and friction costs.

How do unit-linked structures improve SIPP performance?

Unit-linked structures offer a more direct alignment with pension requirements compared to traditional UCITS OEICs. By adopting these vehicles, platforms can significantly reduce the hidden friction costs that quietly diminish retirement pots. The report highlights that these structures provide superior tax efficiency, particularly regarding the treatment of withholding tax, which is often a silent drain on performance in standard fund ranges.

• Institutional pricing access at scale for retail clients.
• Precise portfolio construction allowing underlying changes without client disruption.
• Broader asset access including private markets and diverse return drivers.

By moving away from "inherited" investment structures, providers can ensure that retirement income sustainability is prioritized over legacy operational convenience.

Why is the SIPP market slow to adopt these structures?

Despite the £1.5 trillion market size for unit-linked assets in the UK, SIPP adoption remains sluggish due to perceived implementation complexity and regulatory caution. Many providers are currently distracted by newer vehicles like Long-Term Asset Funds (LTAFs), overlooking the established benefits of unit-linked life wrappers. However, Mobius argues that for most platforms, integration requires no new permissions and carries no balance sheet risk.

• Overcoming perceived complexity through institutional infrastructure.
• Scalable retirement propositions built for long-term decumulation.
• Regulatory alignment with recent FCA consultations on SIPP standards.

"Investment structure is one of the most consequential decisions a platform makes, yet too often it's inherited rather than chosen. UCITS funds do an important job, but when the goal is efficient retirement income, the costs and constraints add up in ways clients never see. Unit-linked structures already sit at the heart of the UK pension system. For SIPP providers, the opportunity isn't more choice – it's removing the friction that quietly eats into returns." said James Finch, CEO at Mobius.

What are the regulatory implications for SIPP providers?

The FCA's recent consultation (CP26-20) suggests a shift toward more proportionate due diligence for unit-linked investments. This regulatory tailwind provides a clear opening for platforms to re-evaluate their operating models. As the industry moves toward more sophisticated decumulation strategies, the infrastructure supporting these pensions must evolve to handle sequencing risk and cost transparency more effectively.

"As retirement propositions become more sophisticated, platforms are having to think harder about the infrastructure underneath them. This report is a useful contribution to that conversation. Rather than being a case of which structure wins, the discussion should hinge on how platforms are making deliberate choices about the vehicles they use, and whether those choices serve clients in decumulation as well as accumulation." said Keith Phillips, CEO, Platforms Association.

FF NEWS TAKE:

This report highlights a critical blind spot in the UK wealthtech space. While unit-linked structures are often dismissed as "old school" insurance tech, their efficiency in a pension wrapper is undeniable. As SIPP platforms face fee compression and increased regulatory scrutiny over Value for Money, ignoring a structure that could instantly boost net returns by 20-30 basis points is no longer an option. This moves the needle by reframing infrastructure as a performance lever.