Pension providers in survival of the fittest showdown as market merges, with a small number of players controlling most of the total assets under management by 2020
The market for auto-enrolment scheme providers will be dominated by a handful of major players by 2020.
According to a report released today by the Pensions Institute at Cass Business School, fewer than 10 organisations will form a premier league of providers, controlling 90 per cent of total assets under management.
“By 2020 several well-known life companies will no longer exist in their present form, or at all,” said Dr Debbie Harrison, visiting professor at the Pensions Institute and co-author of the report. “Some will be bought wholesale by more competitive life companies; others will be sold-off piecemeal as a series of books of business.”
However, far from creating a marketplace devoid of competition and congested with bad deals for the consumer, the report instead predicts that firms will strengthen their offerings by specialising, warning that “ the days of making money from being a ‘jack-of-all-trades and master of none’ are over.”
Speaking to Morning Wire, Clive Bannister, chief executive of the Phoenix Group, whose company sponsored the research, said: “My observation is that there will be continued consolidation, which will result in fewer, larger players that will represent an oligopoly. An oligopoly can, in real sense, deliver value of clients. Why? Because the oligopolies are larger and then can pass on the benefits that that scale brings.”
The level of assets under management is also expected to nearly double over the next five years, going from £280bn to £550bn.