SIPP platforms are sacrificing client returns by failing to utilise unit-linked structures, a new report has suggested.
The report from Mobius, in partnership with The Platforms Association, says a lack of unit-linked structures is creating friction costs that directly erode net returns, undermine cost efficiency and limit how far platforms can develop their propositions over time.
While UCITS Open-Ended Investment Companies dominate SIPP fund ranges, the report argues that platforms discounting unit-linked structures are missing a route to better client outcomes and more scalable retirement propositions.
Bank of England data estimates the UK unit-linked market at around £1.5 trillion, the majority held within pensions. Despite this, perceived complexity, implementation cost and an industry focus on newer structures such as Long-Term Asset Funds are preventing SIPPs from adopting unit-linked structures.
James Finch, CEO at Mobius, said: “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.
“The perception is that this opportunity means complexity and regulatory burden. In practice, for most platforms it’s an extension of what they already do, which is no new permissions, no balance sheet risk, and a structure built for scale.”
According to the report’s findings, UCITS OEICs remain an important part of the market but their limitations become apparent when the objective is delivering efficient pension solutions. Costs, withholding tax and constraints on portfolio design can all erode outcomes in ways that are not always visible to clients or advisers, the report found.
By contrast, unit-linked structures are more closely aligned with pension needs, with benefits including tax efficiency; access to a broader range of assets; cost efficiency; precise portfolio construction and better management of sequencing risk.
Keith Phillips, CEO of Platforms Association, added: “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.”
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