#5 Divergence from cost of wind-down as regime beds in

Number 5 in a series of headscratchers about SIPP capital adequacy proposals

The mismatch between the cost of winding down a SIPP and the capital requirement will drift over time as the former will ordinarily be linked to wage/price inflation whereas the latter is linked to market values.

For example, we expect that a stagnant SIPP business will need progressively more capital each year due to wage/price inflation whereas ICR will increase or decrease depending on SIPP asset values.

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