By Anton Padmasiri Posted on 18.06.2025
The UK’s self-invested personal pension (SIPP) market is on a steep growth trajectory, currently valued at around £500 billion and projected to double to £1 trillion by 2030¹. But behind the impressive numbers, this rapid expansion is creating mounting operational pressure, especially as clients opt for pension drawdown over traditional annuities.
In 2023 alone, drawdown entries rose by 6%², underscoring a lasting shift in retirement preferences. Longer life expectancy, the rise of defined contribution schemes, and a demand for flexible retirement income are reshaping how pensions are accessed.
Each drawdown request initiates a complex administrative chain—benefit crystallisation, PCLS cash management, PAYE calculations, allowance tracking, HMRC reporting, and documentation generation. Many SIPP providers still rely on manual processes that are already struggling to keep up.
The cost of manual operations
Outdated systems mean processing delays and increased risk. Senior staff are diverted to routine tasks, while errors in PAYE or cash availability lead to missed or delayed payments. These aren’t minor inconveniences—retirees often depend on timely access to funds.
Consider the ripple effects—manual benefit crystallisation calculations require senior staff time, cash availability miscalculations delay critical payments, PAYE errors necessitate corrections with HMRC, and document generation backlogs leave clients without essential certificates. Each failure increases operational risk and degrades client experience.
The service gap is also widening. Research shows one in four investors may switch providers that lag behind in terms of tech capabilities3. In an age of instant digital service, clients won’t tolerate multi-day delays for critical pension functions.
The automation advantage
Automation solves these issues at scale. Benefit crystallisation can be performed instantly by systems programmed with complex regulatory logic. Intelligent cashflow management can automatically trigger portfolio sell-downs, ensuring liquidity for withdrawals.
PAYE processing becomes seamless, accurately handling tax code changes and income splits. Real-time allowance tracking and automated HMRC reporting (e.g., P60s, RTI submissions) eliminate backlogs. Document generation, from payslips to certificates, can be completed and delivered within hours, not days.
AI: Enhancing human expertise
Automation handles scale, but AI offers strategic depth. AI-driven tools can personalise client communications, optimise withdrawal timing, and recommend tax-efficient strategies based on historical and market data. These systems enhance operational efficiency, allowing advisers to concentrate on high-value client interactions.
AI also transforms service delivery, as clients get timely and relevant updates, while intelligent query routing accelerates resolution. Rather than replacing advisers, AI empowers them.
A strategic imperative
The SIPP providers who lead this market shift will be those investing in scalable, cloud-native platforms today. These platforms must be API-first, easily integrable, and adaptable to regulatory evolution. The move away from legacy systems isn’t just technical—it’s strategic.
With drawdown demand rising and expectations increasing, maintaining the status quo is no longer sustainable. The question is no longer whether to automate, but how soon. Those who embrace automation and AI will be best placed to deliver the retirement experience clients expect and capture the market growth ahead.
Sources: