Table of Contents
Introduction and Abbreviations
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- Getting to know the consumer
- Key sources
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Getting the word out
- Tesco…every little counts
- I don’t trust pensions
- Email reminders
- Stakeholder speed dating
Executive Summary
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- Consumer savings are expected to increase
- Pension contributions have risen faster than earnings
- IFAs steer clear of stakeholder pensions
- Advertising activity is low
- A stakeholder what?
- Typologies
- Sales set to rise?
Market Drivers
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- An ageing population will put strain on the state system
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- Figure 1: Population growth estimates, by age group, 2000-10
- Consumers who refuse to save can expect little from the state
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- Figure 2: Weekly state pension levels, 2005/06 tax year
- Consumer saving is expected to increase
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- Figure 3: PDI, consumer expenditure, savings and saving ratio, 2000-10
- Low base interest rate gives savers little incentive
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- Figure 4: The Bank of England base rate, October 1990-October 2005
- The stock market is picking up
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- Figure 5: FTSE 100, October 1996-April 2005
- The price cap has been raised
- Workplace access to SHPs is not enough
- Launch of product suite may boost sales
Market Size and Trends
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- Pension contributions have risen faster than earnings
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- Figure 6: Average earnings and pension contribution indices, 2000-05
- Company schemes are remarkably popular
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- Figure 7: Ownership of selected pension products, 2005
- As many as 17 million people may be eligible for a stakeholder pension
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- Figure 8: Pension penetratiion in the UK, September 2005
- Individual pension business
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- Figure 9: New individual pension business, 2000-05
- More money is being invested in single-premium SHPs by fewer people
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- Figure 10: Single-premium stakeholder pension sales (non-employer-sponsored), 2001-05
- Sales of regular-premium non-employer-sponsored SHPs are lagging
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- Figure 11: Regular-premium stakeholder pension sales (non-employer-sponsored), 2001-05
- Employers can play an important role in stakeholder market
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- Figure 12: Employer-sponsored stakeholder pension sales, 2001-05
- The decline of non-employer-sponsored schemes is more rapid than that of employer-sponsored schemes
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- Figure 13: Illustration of volume sales of stakeholder pensions, by employer-sponsored and non-employer-sponsored, 2001-05
Key Players and the Competitive Environment
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- One in four SHPs sold are from Norwich Union
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- Figure 14: Market share of new stakeholder business, 2003 and 2004
- Room for retailers?
Distribution and the Internet
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- IFAs are gaining more pensions business
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- Figure 15: Distribution of new APE individual pensions business, 2000-Q2 2005
- When SHPs and IFAs don’t mix
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- Figure 16: Distribution of new stakeholder pension business, first half 2005
- The Basic Advice process could make Internet sales a possibility
Advertising and Promotion
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- £4 million invested on government-sponsored ad campaign
- Adspend on SHPs is low compared to other pension areas
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- Figure 17: Advertising expenditure on pensions, 2003/04 and 2004/05
- Direct mail is the preferred advertising outlet for SHPs
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- Figure 18: Adspend on stakeholder pensions, by advertisers and by outlet, 2004/05
Consumer Financial Activity
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- Consumer confidence remains weak but prospects look more promising
- Relationship with the main financial services providers
- High levels of activity from June 2005 onwards
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- Figure 19: Savings, investment, borrowing and debt repayment – consumers’ expected activity, March 2004-June 2005
- Younger respondents looking to refresh their financial affairs
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- Figure 20: Expected financial activity, by socio-demographic and income groups, June 2005 and average for the last 14 quarters
- More activity than a year ago
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- Figure 21: Leading financial activities planned in the next six months, June 2004-June 2005
- Housing indicators pick up sharply
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- Figure 22: Intended mortgage and property purchase activity, June 2003-June 2005
- HSBC gains ground in terms of MFSPs
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- Figure 23: Leading main financial services providers’ market shares, June 2004-June 2005
- Bank of Scotland will gain life and pensions business, Nationwide BS should be strong in savings
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- Figure 24: Saving, investment and lending, market sizes by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), June 2005
- The Scottish banks will have the most active customer base
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- Figure 25: Adspend on stakeholder pensions, by advertisers and by outlet, 2004/05
The Consumer and Product Ownership
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- Only a small proportion of people have a stakeholder pension
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- Figure 26: Pension ownership, 2004 and 2005
- SHPs make their mark on younger consumers
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- Figure 27: Pension ownership, by gender, age, socio-economic group and region, September 2005
- Implications and opportunities
- Almost half of all third age singles will depend on state pension
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- Figure 28: Pension ownership, by marital status and detailed lifestage groups, September 2005
- Opportunities and implications
- Seven in ten renters will face a retirement in poverty
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- Figure 29: Pension ownership, by working status, gross annual household income and tenure, September 2005
- Implications and opportunities
- Could the Basic Advice process allow retailers to move into stakeholder pensions?
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- Figure 30: Pension ownership, by newspaper readership, new techonology, commercial TV viewing and supermarket usage, September 2005
- Implications and opportunities
- Stakeholder owner profile
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- Figure 31: Profile of stakeholder policyholders, by gender, age, socio-economic group, region and working status, September 2005
- Implications and opportunities
- Many SHPS are arranged directly from a pension company
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- Figure 32: Source used to arrange a personal or stakeholder pension, 2004 and 2005
- Implications and opportunities
- A stakeholder what?
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- Figure 33: Knowledge of and potential to buy stakeholder pensions, 2004 and 2005
- Implications and opportunities
- SHPs ring a bell with men, not so with women
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- Figure 34: ‘I have never heard of a stakeholder pension before today’, by gender, age, socio-economic group and region, September 2005
- Implications and opportunities
- Younger people are considering investing in SHPs
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- Figure 35: ‘I am thinking about getting a stakeholder pension but have not sone so yet’, by gender, age, socio-economic group and region, September 2005
- Implications and opportunities
- Londoners don’t know whether their company has offered them a stakeholder pension
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- Figure 36: ‘My company has offered me a stakeholder pension’, by gender, age, socio-economic group and region, September 2005
- Implications and opportunities
- Full-time workers have most exposure to SHPs at work
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- Figure 37: ‘My company has offered me a stakeholder pension’, by working status, gross annual household income and tenure, September 2005
- Implications and opportunities
Consumer Attitudes and Targeting Opportunities
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- No money to invest
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- Figure 38: Reasons for not purchasing an SHP, September 2005
- Repertoire
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- Figure 39: Number of reasons for not having a stakeholder pension, September 2005
- I already have a pension
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- Figure 40: Repertoire analysis, by reasons for not investing in a stakeholder pension, September 2005
- Implications and opportunities
- Youngsters don’t make excuses
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- Figure 41: Repertoire analysis, by gender, age, socio-economic group and region, September 2005
- Implications and opportunities
- Typologies
- 18-24-year-olds are Broke
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- Figure 42: Consumer typologies, by gender, age, socio-economic group and region, September 2005
- Implications and opportunities
- One in five third agers are Suspicious
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- Figure 43: Stakeholder pension typologies, by marital status and detailed lifestage groups, September 2005
- Implications and opportunities
- Saving for a deposit vs saving for retirement
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- Figure 44: Stakeholder pension typologies, by working status, gross annual household income and tenure, September 2005
- Implications and opportunities
- Broke customers are glued to their TVs
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- Figure 45: Stakeholder pension typologies, by newspaper readership, new technology, commercial TV viewing and supermarket usage, September 2005
- Implications and opportunities
- The Broke are very unprepared for their retirement
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- Figure 46: Stakeholder typologies, by pension ownership, September 2005
- Implications and opportunities
- Half of the target group have never heard of the product
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- Figure 47: Agreement to ‘I have never heard of a stakeholder pension before today’, by stakeholder typologies, September 2005
- Implications and opportunities
- The Prepared have no need of SHPs
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- Figure 48: Agreement to ‘I am thinking about getting a stakeholder pension, but haven’t yet done so’, by stakeholder typologies, September 2005
- Implications and opportunities
- The Avoiders ‘don’t know’ if they’ve been offered an SHP
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- Figure 49: Agreement to ‘My company has offered me a stakeholder pension’, by stakeholder typologies, September 2005
- Implications and opportunities
Industry Views
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- Lack of awareness
- Distribution
- Future issues
The Future
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- The state needs to step in
- Will sales pick up?
- A second wind
- Distribution possibilities
- Will poaching be a problem?
Forecast
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- From which consumer groups will demand for SHPs come?
- The three scenarios
- The industry will face the same challenges in five years’ time
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- Figure 50: Scenario 1, 2005 and 2010
- More consumers will be Prepared for retirement
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- Figure 51: Scenario 2, 2005 and 2010
- Scenario 3 predicts an increase in the number of Broke consumers
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- Figure 52: Scenario 3, 2005 and 2010
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