This year is likely to see plenty happening, or at least being discussed, in the UK financial services and pension market.

London-based CoreData Research has made a few predictions on what we can expect to see in 2008.

Arguments over SIPPS ‘mis-selling’

Large numbers of self-invested personal pensions (SIPPS) have been set up over the past couple of years, particularly by financial advisers using SIPPS from life offices.

The FSA has voiced its concerns over the appropriateness of many of these pensions and we can expect a lively debate to continue in 2008.

Among the issues being discussed here are the comparative costs and benefits of personal pensions and SIPPS, the churning of old books of business and the distinctions between a true SIPP and inferior models.

Other issues to affect the SIPPS market could be consolidation among providers, the use of SIPPS to invest protected rights and SIPPS as a home for enhanced transfers from old occupational schemes and other accumulated benefits.

Public anxiety over pension differences

It also seems likely that 2008 will see growing resentment among private sector workers over the generosity of many public sector pension arrangements.

Increases in council tax to pay for pensions or public sector strikes over pension issues could trigger this and it could become a bone of contention for the media.

Whether any politicians are brave enough to pick up this hot potato remains to be seen, as they weigh up its populist appeal against the strength of the public sector unions and voters therein.

Managing defined benefit (DB) liabilities

The last few weeks of 2007 saw some large buyouts of DB liabilities.

In some cases, such as the recent Emap deal, a buyout is part of a larger corporate restructuring.

In other cases, employers with closed DB plans will look to shed long-term liabilities via a buyout.

An increasingly competitive buyout market could also see rationalisation among some of the new entrants.

One common step on the road to a buyout or another solution is to encourage deferred members to transfer out.

This year could see more large employers wanting to get rid of their liability to ex-employees by offering cash incentives and enhanced transfer values to them, despite concerns over negative publicity.

Risk-sharing between companies and staff

In some cases, where a DB structure exists and is seen as beneficial for staff recruitment and retention, companies and employees could strike risk-sharing pension agreements.

This development needs help from the government, but it could produce a compromise between unaffordable DB schemes and impoverished Defined Contribution (DC) plans.

Any risk-sharing agreements will be closely scrutinised and debated, with optimists hoping this means DB is not dead, only sleeping.

DC pensions under the spotlight

With the new national pension scheme, Personal Accounts, on the horizon, there will be an increasing debate on whether DC pensions are working.

Issues of low take-up and contribution rates, the need for efficient and accurate administration, the problems of investment choice and the issue of ‘lost accounts’ due to staff turnover will all get an airing. A wide-ranging debate on DC could help improve standards overall and would certainly be more edifying a narrow political row over the merits of compulsion and likely impact of Personal Accounts.