Nick Goodway: Specialists will thrive despite ‘premier league’ pension firms

So the UK’s life-company sector is heading for massive consolidation over the next five years that will result in a new “premier league” of pension providers.

So says the Pensions Institute at Cass Business School, which is predicting that several of the best-known names in savings and pensions will have disappeared by 2020, leaving a handful of companies controlling the £550 billion market.

It is predicting the number of players in the market will be cut from around 80 to just 10, which will have roughly 90% of the pensions market.

Now that is seemingly very bad news.

Just like the actual Premier League, it will mean more power concentrated in the hands of the few, together with higher prices for ordinary punters and, if Sunday was anything to go by, fewer goals.

As a result, we could end up with an amorphous sector aimed firmly at the auto-enrolment market offering little in the way of differentiation.

And what’s more, as we all know, the larger funds under management become, the harder it becomes to achieve market-beating returns.

But there is some hope left.

A bit like the way the greed of the Premier League clubs actually appears to be giving something of a boost to non-league football, the emergence of behemoths will leave space for fleeter-footed specialists.

Family offices, alternative wealth managers and cult fund managers such as Terry Smith will find plenty of room to attract new business and produce returns that beat the pack in this brave new world.