The number of self-invested personal pensions (SIPPs) worth £1m or more on the Hargreaves Lansdown platform has increased from 3,166 at the end of March 2022 to 3,794 this year, the investment platform revealed today.
That’s a 20% increase in the space of two years, but the number is set to grow even more in the future thanks to auto-enrolment into workplace pensions, according to Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, who said the dream of living retirement in comfort is possible, but takes work.
Pensions have been in the zeitgeist over recent months with the general election coming into view. Both Labour and the Conservatives have made pledges around retirees, with one of the most recent being Labour’s decision to scrap plans to reinstate the lifetime allowance, which was recently removed by current chancellor Jeremy Hunt.
“The recent abolition of the lifetime allowance will also act as an incentive for people to continue to build on their pension savings and make full use of all their allowances,” said Morrissey
“Labour’s stance on reintroducing it, should it win the election, brought confusion and uncertainty to people’s planning. The recent news that it has opted not to go down this route has been greeted with a collective sigh of relief from savers and the pension industry alike.”
However, it is not all plain sailing, particularly for women, who only constitute 10% of SIPP millionaires on Hargreaves Lansdown – something Morrissey described as a “fly in the ointment”.
The gender pension gap is down to many factors, most notably lower average pay, part-time work and time spent out of the workforce looking after family members.
The median age of millionaire investors is 63 years, showing how much time it takes to build up wealth. It is for this reason the first tip for aspiring Sipp millionaires is to start as early as possible.
Other tips include making the most of employer contributions, investing for the long term and building up knowledge.
“Time in the markets means your contributions benefit from extra investment growth and you have more time to tweak your strategy to remain on track,” Morrissey said.
“Spread your risk and check periodically to make sure your portfolio remains balanced. It can be easy to get waylaid by short-term investment fads but these can be volatile, and you will in incur costs switching investments.”
How do Sipp millionaires invest?
The portfolios of Sipp millionaires hold slightly higher allocations to the UK, US and gilts than non-millionaires, Morrissey noted.
Their favourite funds include Fundsmith Equity, Lindsell Train Global Equity and Rathbone Global Opportunities, as well as a list of Legal & General index funds, as the table below shows.
Top funds among self-invested personal pensions
Source: Hargreaves Lansdown
Turning to stocks, the most held is Apple, followed by Nvidia. Microsoft, Tesla and Amazon are also in the top-10 and complete the list of Magnificent Seven, leaving out Meta and Alphabet. US business intelligence and cloud company MicroStrategy was also a favourite. In the UK, people went for Lloyds, Legal & General, Shell and Aviva.