Last month, we carried out a survey of which over 1,000 office workers responded. The questions covered how they manage their Self-Invested Personal Pension (SIPPs) and their attitudes towards including alternative finance and P2P investments in their SIPPs. The results of our survey showed some interesting findings.
One in four of the survey respondents said they were are interested in including P2P loans in a SIPP or have already done so, and that if concerns around regulation and a lack of understanding of the sector were addressed, this figure could be higher still.
• Some 25% of respondents said they have already invested or were interested in investing in P2P loans via SIPP
• Access to fixed returns (34%) followed by the ability to secure higher returns (26%) were the two factors cited as the most compelling reasons to invest in P2P loans
• Lack of FSCS protection (53%) and money being at risk (53%) and a perception that the market is not adequately regulated (31%) were the biggest deterrents to investing in P2P
• Some 33% of respondents said that if they thought the market was properly regulated it would be a positive key factor in persuading them to invest in P2P loans
• Close to 34% said that they would hold 1-5% of their SIPP investments in P2P loans, over 25% said they would hold between 6-10%, while 15% said they would be happy holding above 10%
• Shares (43%), cash (33%) and unit trusts (29%) and investment trusts (22%) were the most common SIPP investment
• A quarter (25%) of respondents have a low-cost SIPP, where no investment advice is provided, while 13% have a full SIPP, where experts provide guidance on investments
• Just over 50% said that they reviewed their SIPPs annually, close to 15% weekly, some 13% monthly and close to 8% of respondents said they did so daily
According to our survey, two key factors account for the robust interest by private investors in P2P loans via a SIPP: access to fixed rate returns and higher returns than comparable offers. Indeed, one-year net returns across UK peer-to-peer platforms stand at 3.77%  while at Blend Network we have returned an average of 11.38% to date .
“Peer-to-peer is definitely not a closed area for pension investment, despite what your SIPP or SSAS operator might tell you! Since 2014, we’ve helped SIPP and SSAS investors lend more than £20 million on a range of peer-to-peer platforms. If you want to lend your pension money on Blend Network, we’re ready to help you.”
However, the findings also indicate that if concerns regarding regulation and investor understanding of the evolving sector is improved then this could substantially increase the level of interest in investing in P2P loans via a SIPP. From the survey results it appears that the FCA’s recent announcement of measures to better regulate the sector, involving an investment limit for restricted customers to 10% of their net assets, using appropriateness testing to ascertain whether individuals are suitable to invest and setting out the minimum information that P2P platforms are required to provide to investors, need to be better publicised so investors are more fully informed. Those are all measures that Blend Network already comply with and we very much welcome any measures that are intended to provide further protection to lenders. As our lenders will know, at Blend Network we pride ourselves on the high level of detailed information we provide for each loan in order to help prospective lenders understand the product and its risks.
All in all, the findings of our survey clearly reflect significant interest among private pension holders for access to P2P lending via SIPPs. It also indicates reservations on the part of investors around regulatory developments and understanding of the product, which, if addressed, could significantly increase investor commitment to the sector.
Stay tuned and keep an eye on www.blendnetwork.com for more deals to come in very soon.