Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Insights and Opportunities
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- Converting the sceptics
- Boosting the image of providers
- Cutting down on red tape
- Bringing pensions front-of-mind
Market in Brief
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- New premiums into personal pensions have increased
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- Figure 1: New individual pension APE* premiums, by product type, 2002-07
- Many factors have encouraged market growth…
- Concerns are mounting over an ageing population
- The decline of occupational schemes has boosted the market
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- Figure 2: Status of private sector occupational pension schemes, 2006
- AXA leads the market
- Advertising budgets for pensions are relatively small
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- Figure 3: Advertising expenditure, by financial services category, 2002/03-2006/07
- The majority of new business comes through an IFA
- Occupational pensions are more commonly held
- Many perceive pensions to be ‘complicated’
Fast Forward Trends
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- Rule of Thumb
- What’s it about?
- Market touchpoints and implications
- Home as Pension
- What’s it about?
- Market touchpoints and implications
- Living Better, Longer
- What’s it about?
- Market touchpoints and implications
Internal Market and Regulatory Environment
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- Key points
- The decline of occupational pension schemes
- Basic state pension = basic lifestyle in retirement
- S2P replaces SERPS
- The impact of A-day…
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- Figure 4: Pensions lifetime allowance and annual allowance, 2006/07-2010/11
- …with more options after retirement
- Reform of the UK pensions system
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- Figure 5: Summary of reccomendations in the Pensions White Paper
- The impact of personal accounts on the pensions industry?
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- Figure 6: Department for Work and Pensions model of the pensionable population, 2004
- The Retail Distribution Review
- Increasing consumer understanding
- What’s all this ‘fair treatment’ business about?
Broader Market Environment
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- Key points
- The UK’s ticking pensioner time bomb
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- Figure 7: Population growth projections, by age, 2002-12
- Changing longevity assumptions
- Stockmarket volatility may discourage investment
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- Figure 8: FTSE 100 Share Index, Jan 2006-Dec 2007
- A tough year expected in 2008 will hit pension contributions
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- Figure 9: Financial priorities over the next 12 months, by order of significance, January 2008
- The growing number of ABs is a positive sign for providers…
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- Figure 10: Population, by socio-economic distribution, 2002-12
- …as is the increasing amount of personal disposable income
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- Figure 11: PDI, consumer expenditure and savings, 2002-12
- Macro-economic situation could cloud the picture
Competitive Context
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- Key points
- Occupational pension schemes on the decline
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- Figure 12: Number of private sector occupational pension schemes in the UK, by scheme size, 2002-06
- Half of private sector schemes frozen, closed or winding up
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- Figure 13: Status of private sector occupational pension schemes, 2006
- The continued rise of equity release…
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- Figure 14: Lifetime mortgages newly advanced and balances outstanding, by volume and value, 2002-06
- …and the buy-to-let market
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- Figure 15: Number and value of buy-to-let sales, 1999-2007
- ISAs as an alternative to a pension?
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- Figure 16: ISA deposits, by type of ISA, 2001/02-2006/07
Strengths and Weaknesses in the Market
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- Market strengths
- Longevity increases the need for (larger) pensions
- The appeal of tax-efficient contributions
- Increasing flexibility in the market
- Personal accounts may raise the profile of personal pensions
- Market weaknesses
- A tightly regulated market limits opportunity for product development
- Weakness in the economy forecast for 2008 may discourage investment
- Perception that pensions are complicated and reserved for the affluent
- Personal accounts are a potentially competing product
Who’s Innovating?
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- Key points
- The difficulty of innovating in pensions
- New funds and restructured investment products
- More activity on SIPPs
- Technological developments
Trade Perspective
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- The struggles of stakeholder pensions
- The growth of SIPPs
- The impact of personal accounts
- Transfers into personal pensions on the rise
- Adviser commissions influence the market
- So how is the RDR going to change things?
- The impact of A-day
Market Size and Forecast
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- Key points
- Individual vs. occupational pension schemes
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- Figure 17: Total new premiums paid into individual and occupational pensions, 2002-07
- A permanent shift in the balance
- The gradual decline of individual personal pensions
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- Figure 18: Total number of policies and regular premiums from individual pensions business in force, by pension type, 2002-06
- Disappointing increase in policies in force
- There’s big ones (personal pensions) and small ones (SIPPs)
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- Figure 19: Total number of individual pensions in force, by pension type, 2006
- Doom and gloom for stakeholder pensions?
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- Figure 20: New individual pension premiums, by product type, 2002-07
- SIPPs lead the way
- Market forecast
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- Figure 21: New APE* premiums into individual pensions, by pension type, 2003-12
- SIPPs continue to grow, stakeholders to stagnate
- Factors used in the forecast
Market Share
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- Key points
- AXA has climbed to lead the pack in 2006
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- Figure 22: Ranking of individual pension providers, based on UK gross written premium, 2004-06
Companies and Products
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- Fund performance varies between providers
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- Figure 23: Best-performing unit-linked and with-profits pensions, decade to March 2008
- AXA (AXA Sun Life)
- Standard Life
- AVIVA plc (Norwich Union Life)
- Lloyds TSB Group (Scottish Widows)
- AEGON plc (Scottish Equitable)
Brand Communication and Promotion
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- Key points
- Pensions is a small proportion of total financial services adspend
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- Figure 24: Advertising expenditure, by financial services category, 2002/03-2006/07
- A large proportion of adspend is accounted for by intermediaries
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- Figure 25: Pensions advertising expenditure, by sub-category, 2003/04-2006/07
- The top ten providers account for over half of all pensions adspend
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- Figure 26: Pensions advertising expenditure, by provider, 2006/07
- Press is the medium of choice for advertising pensions
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- Figure 27: Pensions advertising expenditure, by media type, 2006/07
Brand Elements
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- Brand map
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- Figure 28: Attitudes and usage of pensions brands, February 2008
- Brand experience of pensions brands
- Norwich Union stands out on awareness and popularity
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- Figure 29: Consumer usage of pensions brands, February 2008
- Brand momentum of pensions brands
- Norwich Union is gaining, Friends Provident losing ground
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- Figure 30: Momentum of various pensions brands, February 2008
- Brand intentions of pensions brands
- Friends Provident, Zurich and Scottish Life have low retention
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- Figure 31: Consideration of pensions brands, February 2008
- Brand qualities of pensions brands
- Norwich Union, Prudential and Scottish Widows are seen as most expert
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- Figure 32: Consumer usage of pensions brands, February 2008
- Brand attitudes towards pension brands
- Scottish Widows and Prudential have best reputation
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- Figure 33: Consumer attitudes towards pensions brands, February 2008
- Brand motivation of pensions brands
- Norwich Union and Scottish Widows are best thought of for personal and stakeholder pensions
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- Figure 34: Momentum of pensions brands, February 2008
- Brand satisfaction of pensions brands
- Norwich Union most positive, Scottish Life most negative endorsement
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- Figure 35: Brand satisfaction of pension companies, February 2008
- Brand commitment of pension brands
- Scottish Equitable has the highest customer loyalty
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- Figure 36: Commitment to pensions brands, February 2008
- Round-up
Channels to Market
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- Key points
- The majority of new business comes through an IFA
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- Figure 37: New APE* premiums into individual pensions, by distribution channel, 2002-07
- Individual stakeholder pensions are sold by more tied agents…
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- Figure 38: New regular premiums into individual pensions, by type of pension and distribution channel, Q1-Q3 2007
- …since stakeholder pensions are more suited to bancassurance
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- Figure 39: New regular premiums into individual pensions, via bancassurance, and by type of pension, 2005-07
The Consumer: Pension Ownership and Contribution Levels
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- Key points
- A word on analysis methodology
- A quarter of us are making no provision for retirement
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- Figure 40: Pension ownership, December 2007
- SIPPs have become popular
- How does all this bode for the industry?
- Overview of consumer profiles by pension type held
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- Figure 41: Pension ownership, by gender, age, and socio-economic-group (excluding respondents that are already retired), December 2007
- Final-salary schemes are reserved for the upper classes
- Pension ownership increases with age and income
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- Figure 42: Pension ownership, by marital status, lifestage, working status, household income and ACORN category, December 2007
- Single people are less likely to have a pension
- Pension ownership increases with earnings
- Over two fifths pay less than £100 a month into a pension
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- Figure 43: Monthly pension contributions, December 2007
- Insufficient pension contribution levels?
- Men tend to contribute more than women
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- Figure 44: Monthly pension contributions, by gender, age, lifestage, household income and tenure, December 2007
- Higher earners contribute more
- Renters may be worth targeting
- Personal pension holders are likely to pay in less
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- Figure 45: Monthly pension contributions, by type of pension, December 2007
The Consumer: Attitudes towards Pensions
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- Key points
- Only two fifths of us trust IFAs to give good pensions advice
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- Figure 46: Attitudes towards different sources of pensions advice, December 2007
- Wealthy individuals are more likely to trust IFAs
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- Figure 47: Attitudes towards different sources of pensions advice, by gender, age, socio-economic group, marital status, tenure and ACORN category, December 2007
- Younger people turn to family, not the professionals…
- …but responses raise issues over the NPSS
- Pensions associated with a comfortable retirement…
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- Figure 48: Consumer word associations with pensions, December 2007
- …but there are still negatives
- Most feel duty-bound when it comes to owning a pension
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- Figure 49: Consumer attitudes towards pensions, by mindset groups, December 2007
- Positives outweigh the negatives
- Men are more likely to have reservations
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- Figure 50: Consumer attitudes towards pensions, by mindset groups, by gender, age, marital status, lifestage and household income, December 2007
- Apathy is a condition of the young mind
- The unmarried have fewer reservations
- Families hold stronger reservations about pensions
- High earners see pensions as a duty-bound obligation
The Consumer: Target Group Analysis
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- Key points
- Five key target groups
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- Figure 51: Target group sample sizes, December 2007
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- Figure 52: Target group pension contributions, December 2007
- Dutiful Savvies (8% of adults)
- Provider Trusters (20% of adults)
- Trustless Sceptics (15% of adults)
- Lower-income Lethargics (34% of adults)
- Lower-income Lethargics are apathetic
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- Figure 53: Target groups, by sources trusted pensions advice and word associations regarding pensions, December 2007
- Dutiful Savvies are more likely to make higher contributions
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- Figure 54: Target groups, by monthly pensions contributions, December 2007
- Provider Trusters favour the SIPP
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- Figure 55: Target groups, by pension ownership, December 2007
Appendix: Pension Ownership and Contribution Levels
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- Figure 56: Pension ownership, by gender, age, socio-economic-group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, car ownership, detailed lifestage groups and age/socio-economic group (excluding respondents that are already retired), December 2007
- Figure 57: Pension contributions, by gender, age, socio-economic-group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region, ACORN category, media usage, supermarket usage, household size, car ownership, detailed lifestage groups, age/socio-economic group and terminal education age (excluding respondents that are already retired), December 2007
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Appendix: Target Group Analysis
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- Figure 58: Target groups, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special Groups, working status, household income, tenure, region and ACORN category, December 2007
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