Table of Contents
Issues in the Market
-
- Key issues
- Market background and definitions
- Pension based retirement planning
-
- Figure 1: Types of private pension provision in the UK
- Occupational schemes
- Individual pensions
- Group pensions
- Benefit structures
- Alternatively secured pensions
- Other definitions
- A-day
- Abbreviations
Future Opportunities
-
- Reality check could lead to greater personal pension participation
- The Lost Generation could mean ‘Lost business’ for the pension industry
- Many could be better off shifting extra retirement savings into a pension
- Opportunities for pension consolidation still exists
- A case for e-pensions?
Market in Brief
-
- New business down in 2008
-
- Figure 2: New APE* individual pension premiums, by product type, 2003-08
- Demographic and economic drivers
- Intended financial activity levels favourable to pensions business
-
- Figure 3: Intended life and pensions activity, Q3/Q4 2002-Q4 200/Q1 2009
- Internal market environment
- Most new personal pension business generated through IFAs
-
- Figure 4: New APE* premiums into individual pensions, by type of pension and distribution channel, 2008
- Lloyds (Scottish Widows) tops market share table
- Key consumer research findings
- Pension product ownership
- Value and length of pension contributions
- Attitudes towards saving in a pension
Internal Market Environment
-
- Key points
- The decline of occupational pension provision…
-
- Figure 5: Status of private and public sector schemes, 2007
- … means more people will need to arrange their own pension
- Personal Accounts set to arrive in 2012…
- … with a number of potential effects
- Affordability holds back many from investing in a pension
-
- Figure 6: Reasons for not saving, June 2008
- Indifference also holding the market back
- Psychological barriers also exist
- Past mis-steps have also discouraged greater pension uptake
- FSA alleges that thousands may have been given wrong pension advice
- Difficult-to-understand products make getting advice essential
- Regulatory developments
- The Retail Distribution Review
- Clarity of services – independent advice vs sales advice
- Customer agreed remuneration (CAR)
- Raising professional standards for advisers
- Treating Customers Fairly initiative
- Industry reaction to TCF
- Money Guidance service – for generic advice
- Protected rights funds now eligible for full SIPP investment
Broader Market Environment
-
- Key points
- Improvements in longevity mean longer retirements
-
- Figure 7: Cohort life expectancy at age 60, by gender, 1981-2054
- More retirement years but less money to fund them
-
- Figure 8: Average gross weekly income of pensioner units*, by age, 2006/07
- Old age dependency ratio will continue to rise
-
- Figure 9: Projected size of the UK population, by age band, 2008-46
- Over 8 out of 10 people above 50 still saving for retirement
- An increasing number of people will be working beyond retirement age
-
- Figure 10: UK Economic activity, by gender and age, 2002-10
- Increased job mobility and lifestyle changes
- Saving likely to be difficult for many in the near term
- Poor stock market performance hurting confidence in pension saving
- Inflationary pressure on pensions return and retirement income
Consumer Context
-
- Key points
- Saving and investment intentions on the rise
-
- Figure 11: Savings, investment, borrowing and debt repayment – consumers’ expected activity, December 2007-December 2008
- Over-65s to significantly increase financial activity levels
-
- Figure 12: Expected financial activity, by socio-demographic and income groups, December 2008 and average for the last 27 quarters
- Prospects for life and pension products improving
-
- Figure 13: Intended life and pensions* activity, Q3/Q4 2002-Q4 200/Q1 2009
- Low equity investor sentiment
-
- Figure 14: Intended purchases of shares and equity-based unit trusts, government and corporate bonds and bond-based unit trusts and sales of equities and unit trusts, Q3/Q4 2002-Q4/Q1 2009
-
- Figure 15: Intended cash-based activities, Q3/Q4 2002-Q4/Q1 2009
Competitive Context
-
- Key points
- Consumers have many options when saving for retirement
-
- Figure 16: Summary of retirement funding strategies
- Workplace pension products are the direct competitors
- Traditional occupational pension provision in decline
-
- Figure 17: Number of private sector occupational pension schemes in the UK, by scheme size, 2002-07
- Group pension and company stakeholder business has been brisk
-
- Figure 18: New GPP and company-sponsored stakeholder pension premiums, 2003-08
- Personal accounts a competitive threat
- Non-pension alternatives
Strengths and Weaknesses in the Market
-
-
- Figure 19: Market for individual personal pensions – SWOT analysis, 2009
-
Who’s Innovating?
-
- Key points
- Barclays introduces Stakeholder-SIPP hybrid
- Aviva’s controlyourpension.com puts savers in the drivers seat
- Most innovation taking place within the SIPP segment of the market
- Standard Life’s FundZone now available through SIPP offering
- AJ Bell – SIPPcentre
- Suffolk Life – MasterSIPP
- James Hay takes an innovative approach to e-marketing during a crisis
Trade Perspective
-
- Property downturn has been good for business
- But not much new money has been going into pensions
- Personal pension contribution levels
- Challenges facing the industry
- Consumer apathy
- Need to make pensions compulsory
- Negative perceptions of pensions
- More fund choice needed for personal and stakeholder pensions
- Issues around RDR and NPSS
- Theories on the credit crunch
- Opinions on Absolute Return Funds
- Online pensions not likely to take off
Market Size and Forecast
-
- Key points
- New business suffers in 2008
-
- Figure 20: New individual pension premiums, by product type, 2003-08
- New SIPP and GPP business has been driving the market forward
- Lacklustre growth in existing business
-
- Figure 21: Total number of policies and regular premiums from individual pensions business in force, by pension type, 2003-07
- Market forecast
- Prospects challenging over the near term
-
- Figure 22: Forecast of new APE* premiums into individual personal pensions**, 2003-13
- But there is some hope over the longer term
- Factors used in the forecast
Market Share
-
- Key points
- Lloyds takes top spot and AEGON falls out of the top five
-
- Figure 23: Ranking of individual pension providers, based on UK gross written premium, 2006 and 2007
- Acquisitions have moved Swiss Re and Deutsche Bank up the table
- Top occupational pension providers also active in personal pensions
Companies and Products
-
- Key individual pension product providers
- Scottish Widows (Lloyds Banking Group)
- Aviva plc (formerly Norwich Union)
- Standard Life
- AXA (AXA Life)
- AEGON (Scottish Equitable)
- Key players in retail banking advice market
- Barclays Financial Planning
- Lloyds Banking Group plc/Scottish Widows
Brand Elements
-
- Brand map
-
- Figure 24: Attitudes towards and usage of pension brands, February 2009
- Scottish Widows
- What the brand is trying to achieve
- What the consumer thinks
-
- Figure 25: Attitudes towards the Scottish Widows brand, February 2009
- Standard Life
- What the brand is trying to achieve
- What the consumer thinks
-
- Figure 26: Attitudes towards the Standard Life brand, February 2009
- Aviva
- What the brand is trying to achieve
- What the consumer thinks
-
- Figure 27: Attitudes towards the Aviva brand, February 2009
- Prudential
- What the brand is trying to achieve
- What the consumer thinks
-
- Figure 28: Attitudes towards the Prudential brand, February 2009
- AXA
- What the brand is trying to achieve
- What the consumer thinks
-
- Figure 29: Attitudes towards the AXA brand, February 2009
- Brand qualities of pension brands
- Scottish Widows most dependable
-
- Figure 30: Personalities of various pension brands, February 2009
- Experience of pension brands
- Aviva most experienced
-
- Figure 31: Consumer usage of various pension brands, February 2009
- Brand intentions for pension brands
- Aviva has best customer retention
-
- Figure 32: Consideration of various pension brands, February 2009
- Brand momentum for pension brands
- Aviva and AXA gaining ground
-
- Figure 33: Momentum of various pension brands, February 2009
- Brand motivation for pension brands
- Scottish Widows preferred for personal pensions
-
- Figure 34: Motivation for choosing various pension brands, February 2009
- Brand satisfaction for pension brands
- AXA most excellent, Scottish Life least satisfying
-
- Figure 35: Satisfaction with various pension brands, February 2009
- Brand commitment to pension brands
- Scottish Widows, Legal & General most recommended
-
- Figure 36: Commitment to various pension brands, February 2009
- Round up
Brand Communication and Promotion
-
- Key points
- Pensions-related adspend up 41% over the past year
-
- Figure 37: Pensions category advertising expenditure, by sub-category, year to December 2004-08
- Top ten provider adspend reaches a five-year high
-
- Figure 38: Advertising expenditure by the top ten pensions advertisers, year to December 2004-08
- TV makes up 40% of total advertising adspend in 2008
-
- Figure 39: Overview of media type used to advertise pensions-related products, year to December 2007-08
Channels to Market
-
- Key points
- Most new personal pension business driven by IFAs
- EBCs are active in group pension sales
- In 2008 four in five new individual pensions sales are via IFAs
-
- Figure 40: New APE* premiums into individual pensions, by distribution channel, 2003-08
- Individual pension distribution – Detailed breakdown
- Tied agents have gained a greater share of personal pensions business
-
- Figure 41: Proportional distribution of new APE* premiums into personal pensions, by distribution channel, 2003-08
- IFAs play a key role in GPP distribution
-
- Figure 42: Proportional distribution of new APE* premiums into GPPs, by distribution channel, 2003-08
- Bancassurance plays a key role in individual stakeholder distribution
-
- Figure 43: Proportional distribution of new APE* premiums into individual stakeholder pensions, by distribution channel, 2003-08
- Most company-sponsored stakeholder pensions sold through IFAs
-
- Figure 44: Proportional distribution of new APE* premiums into company sponsored stakeholder pensions, by distribution channel, 2003-08
- IFAs generated 89% of new SIPP business in 2008
-
- Figure 45: Proportional distribution of new APE* premiums into SIPPs, by distribution channel, 2003-08
The Consumer – Pension Product Ownership
-
- Key points
- One in seven saving in an personal pension
-
- Figure 46: Ownership of pension products, by type, January 2009
- Multiple pension ownership = opportunity for consolidation
-
- Figure 47: Ownership of pension products and retirement savings – cross-analysis, January 2009
- Personal pension ownership peaks at the third age lifestage
-
- Figure 48: Type of pension owned, by gender, age, lifestage and marital status, January 2009
- Personal pension ownership skewed toward the affluent
-
- Figure 49: Type of pension owned, by socio-economic group, working status, gross annual household income, TV region and household tenure, January 2009
- Opportunity to move supplemental savings into a pension
- Pension ownership and media and technology usage
-
- Figure 50: Type of pension owned. by daily newspaper readership, technology usage, internet usage frequency and web usage, January 2009
The Consumer – Value and Length of Pension Contributions
-
- Key points
- Over one in seven paying in £300 or more into a personal pension
-
- Figure 51: Monthly pension contributions, by type of pension, January 2009
- Value of contributions tend to rise with age
-
- Figure 52: Monthly pension contributions by gender, age, lifestage and marital status, January 2009
- As expected wealthy contribute most to pension pots
-
- Figure 53: Monthly pension contributions by socio-economic group, working status, gross annual household income, TV region and household tenure, January 2009
- 44% of those with a mortgage contributing £100 a month or more
- Media and technology usage and pension contribution levels
-
- Figure 54: Monthly pension contributions by daily newspaper readership, technology usage, internet usage frequency and web usage, January 2009
- A case for online pensions?
- 58% of personal pension holders contributing for over ten years
-
- Figure 55: Number of years making pension contributions, by type of pension, January 2009
- Contributing more and for longer
-
- Figure 56: Number of years making pension contributions, by value of contributions, January 2009
- Some have left pension savings dangerously late
-
- Figure 57: Number of years making pension contributions, by age, January 2009
- Affluent have been contributing the longest
-
- Figure 58: Number of years making pension contributions, by gross annual household income, January 2009
The Consumer – Attitudes Towards Saving in a Pension
-
- Key points
- A quarter still believe that pensions are the best way to save for retirement
-
- Figure 59: Attitudes towards pension-based savings, January 2009
- Younger consumers waiting for the economy to improve
-
- Figure 60: Attitudes towards pension based savings, by gender, age, lifestage and marital status, January 2009
- Wealthy most likely to view pension saving in a favourable light
-
- Figure 61: Attitudes towards pension based savings, by socio-economic group, working status, gross annual household income, TV region and household tenure, January 2009
- Media and technology usage and opinions on pensions
-
- Figure 62: Attitudes towards pension based savings, by daily newspaper readership, technology usage, internet usage frequency and web usage, January 2009
The Consumer – Further Analysis
-
- Key points
- High earners the primary personal pension target group
-
- Figure 63: Primary pension product target groups
- Consumer confusion?
-
- Figure 64: Type of pension savings by number of products held
- Over a quarter of high-earners holding multiple pension products
-
- Figure 65: Number of pension products held by gender, age, socio-economic group, and gross annual household income
- Key target groups
-
- Figure 66: Pension savings attitudinal groups, January 2009
- Reluctant (38% of sample)
- Company led (24% of sample)
- Clued-up (10% of sample)
- Apathetic (29% of sample)
- Clued-up most likely to own a personal pension
-
- Figure 67: Pension savings attitudinal groups by pension product ownership, January 2009
- Clued-up most like to have more than one product
-
- Figure 68: Pension savings attitudinal groups by number or products owned, January 2009
- Clued-up the biggest contributors
-
- Figure 69: Pension savings attitudinal groups by value of contributions, January 2009
- Attitudinal groups and length of contributions
-
- Figure 70: Pension savings attitudinal groups by lengthen of contributions, January 2009
- Clued-up and Company led come from affluent backgrounds
-
- Figure 71: Pension savings attitudinal groups by gender, age, socio-economic groups, lifestage, and gross annual household income, January 2009
Appendix – The Consumer: Value and Length of Pension Contributions
-
-
- Figure 72: Number of years making pension contributions, by gender, age, lifestage and marital status, January 2009
-
- Figure 73: Number of years making pension contributions by socio-economic group, working status, gross annual household income, TV region and household tenure, January 2009
-
- Figure 74: Number of years making pension contributions by daily newspaper readership, technology usage, internet usage frequency and web usage, January 2009
-
Back to top