Economic conditions affect self-invested personal pension and small self-administered scheme markets like all financial markets.
The way the SSAS and Sipp market evolves in 2024 therefore depends on a number of political and economic factors.
At the forefront is the Bank of England's monetary policy committee.
As the Institute of Economic Affairs warned in mid-December, "there is a clear risk that the BoE will keep rates higher for longer than is either necessary or desirable", which it said could result in the UK being pushed into the fourth recession in 15 years.
Apart from one instance in 2016 – when inflation according to official CPI figures was 0.3 per cent and the BoE base rate was 0.5 per cent – late December 2023 witnessed the only time that the base rate has been higher than inflation, at 5.25 per cent against 3.9 per cent, by a significant margin (this continued in January).
Secondly, when referring to the best possible retirement outcome for pension savers, The Pensions Regulator and the government say this is best achieved by having "fewer, larger and better run schemes".
Although evidence of this view is scarce and it could be argued that these products from a customer perspective lend themselves better to a local high street provider than the slew of conglomerates we see today.
And then of course we might have a general election in 2024.
All of these will have a bearing on how the Sipp and SSAS markets evolve this year.
If things go badly – the economy goes into recession, inflation rebounds and interest rates remain stubbornly high – then the outlook will be gloomy. As it stands inflation rose to 4 per cent in December, as opposed to falling further to 3.7 per cent as economists had predicted.
There will be less disposable and therefore investable income, which will hit savings and pension provision.
On the other hand, say inflation drops to 2 per cent by April, as some economists predict, interest rates fall, the cost of borrowing comes down, the Sipp and SSAS markets will receive a shot in the arm.
Consolidation is likely to continue this year as a number of providers have declared their intentions.
We will have to wait and see how the markets in general react to a new government, not just the pension industry.
Hurdles ahead
Of the 'known knowns', we believe that the abolishment of the lifetime allowance will cause chaos, particularly for the Sipp and SSAS market, which typically handles the larger retirement funds on behalf of high-net-worth individuals.
The latest draft legislation proposes a system so complicated we can only assume the Treasury is trying to regulate the pensions system out of existence.
A lurking threat is that a Labour government will reinstate the LTA, meaning we have to put everything back as it was, creating considerable extra workload.
