Table of Contents
Executive Summary
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- The market
- Little prospect for growth over the next five years
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- Figure 1: Forecast of new personal and stakeholder pension business (regular premiums only) – Fan chart, 2008-18
- New personal and individual stakeholder pension business falls sharply in 2013
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- Figure 2: New personal and individual stakeholder pension business – Regular and single premiums, 2009-13
- Independent advisers dominate distribution
- Competitive position of personal and stakeholder pensions has deteriorated
- Growing interest in SIPPs increases competitive pressures
- Market factors
- Improvement in UK’s economic performance boosts consumer confidence
- Pension auto-enrolment in full swing
- Impact of RDR reforms on the adviser market
- Companies, brands and innovation
- Top five personal pension providers control nearly two thirds of the market
- Personal and stakeholder pension advertising is halved in 2013
- Limited innovation in the personal and stakeholder pension market
- Recent product development driven by the RDR
- The consumer
- Just one in seven regularly contribute to a personal pension
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- Figure 3: Active pension ownership, December 2013
- 48% of those not actively contributing to a pension have no retirement savings at all
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- Figure 4: Reasons for not contributing to a pension, December 2013
- Auto-enrolment increases recent workplace pension ownership at the expense of new personal pensions
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- Figure 5: Length of pension contribution period, December 2013
- Over half have retirement savings valued less than £30,000
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- Figure 6: Value of retirement savings, December 2013
- Internet and IFAs are the most popular choices for pension advice
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- Figure 7: Sources of pension advice, December 2013
- Over two thirds of non-retirees are aware of auto-enrolment
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- Figure 8: Agreement with statements about pensions and retirement savings, December 2013
- What we think
Issues and Insights
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- Auto-enrolment generates opportunity for the personal pensions market
- The facts
- The implications
- Are SIPPs becoming a threat to personal pensions?
- The facts
- The implications
- The younger generation should not be forgotten by personal pension providers
- The facts
- The implications
Trend Application
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- Personal pension providers to target the self-employed
- Bringing personal pension products to consumers
- The next generation of savers
Pension Regulation and Legislation
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- Key points
- Pension auto-enrolment scheme in full swing
- Potential workplace pension charges cap on the horizon
- Impact of RDR reforms on the adviser market
- State pension to be made simpler
Market Drivers
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- Key points
- Improvement in UK’s economic performance boosts confidence
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- Figure 9: GfK Consumer confidence barometer, UK, January 1994-January 2014
- Income squeeze continues
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- Figure 10: Monthly changes in RPI and average weekly earnings, January 2009-December 2013
- Figure 11: Quarterly changes in the savings ratio*, 1998-Q3 2013
- Auto-enrolment provides a major boost to the occupational pension market
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- Figure 12: Total new insurer-administered occupational pension premiums*, including regular and single-premium business, 2007-13
- Growing interest in the SIPP segment of personal pensions
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- Figure 13: Total wealth management industry SIPP assets, 2007-13
- ISAs can be considered alternative retirement saving strategies
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- Figure 14: Value of ISA sales, by type of ISA, 2008/09-2012/13
SWOT Analysis
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- Figure 15: Personal and stakeholder pensions – SWOT analysis, 2014
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Who’s Innovating?
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- Key points
- Limited innovation in the personal and stakeholder pension market
- Aviva’s response to RDR for advisers
- Product innovation from the adviser side
Market Size and Forecast
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- Key points
- New regular-premium business continued to fall sharply in 2013
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- Figure 16: New personal pension and individual stakeholder pension business, 2009-13
- Nearly two thirds of new single-premium business is attributable to transfers
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- Figure 17: Transfers as a share of new personal and individual stakeholder business, 2009-13
- Five-year forecast of the value of regular-premiums business
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- Figure 18: Forecast of new personal and stakeholder pension business (regular premiums only) – Fan chart, 2008-18
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- Figure 19: Forecast of new regular-premium personal pension and individual stakeholder pension business, 2008-18
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Aviva holds its position as personal pension market leader in 2012
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- Figure 20: Ranking of individual pension providers – UK, by GWP relating to total individual pension business, 2011 and 2012
Companies and Products
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- Aviva
- Company description
- Pension portfolio
- Distribution
- Key financial data
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- Figure 21: Aviva plc value of new UK life and pensions business, Q1-Q3 2012 and 2013
- Figure 22: Aviva plc UK long-term business market performance, 2011 and 2012
- Recent activity
- Standard Life
- Company description
- Pension portfolio
- Distribution
- Key financial data
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- Figure 23: Standard Life Group value of new UK and Europe business, Q1-Q3 2012 and 2013
- Figure 24: Standard Life Group financials for UK and Europe*, 2011 and 2012
- Recent activity
- AEGON UK
- Company description
- Pension portfolio
- Distribution
- Key financial data
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- Figure 25: Interim results for UK business of AEGON Group, Q1-Q3 2012 and 2013
- Figure 26: Annual results for UK business of AEGON Group, 2011 and 2012
- Recent activity
- Lloyds Banking Group
- Company description
- Pension portfolio
- Distribution
- Key financial data
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- Figure 27: Lloyds Banking Group insurance division half-year results, 2012 and 2013
- Recent activity
- Old Mutual
- Company description
- Pension portfolio
- Distribution
- Key financial data
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- Figure 28: Old Mutual Wealth financials on long-term savings*, 2011-13
- Recent activity
Brand Communication and Promotion
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- Key points
- Minor reduction in overall advertising expenditure on pensions
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- Figure 29: Total advertising expenditure on pension products and services (excluding annuities), 2008/09-2012/13
- Personal and stakeholder pension advertising is halved in 2013
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- Figure 30: Total advertising expenditure on pension and retirement income product, by sub-category, 2008/09-2012/13
- Auto-enrolment keeps DWP in the lead as top advertiser of pensions
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- Figure 31: Top 10 advertisers of pension products and services (including retirement income products), 2010/11-2012/13
- TV becomes most popular advertising channel for pensions in 2013
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- Figure 32: Total advertising expenditure on pension and retirement income product, by media type, 2010/11-2012/13
- Online channels provide an opportunity for personal pension providers
- A note on adspend
Channels to Market
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- Key points
- New adviser model categories now in effect
- Independent advice dominates personal pension sales in 2013
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- Figure 33: New personal pension business, by sales channel, 2013
- Figure 34: New personal pension business, by sales channel, Q1-Q4 2013
- Majority of individual stakeholder pensions sold directly or via restricted advice
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- Figure 35: New individual stakeholder pension business, by sales channel, 2013
- Figure 36: New individual stakeholder pension business, by sales channel, Q1-Q4 2013
Active Pension Ownership
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- Key points
- Survey background
- Individual pension ownership remains low while workplace pension ownership increases significantly
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- Figure 37: Active pension ownership, by scheme type, December 2012 and 2013
- Personal pensions remain more attractive for the higher earners
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- Figure 38: Active pension ownership, by highest rate of income tax paid, December 2013
- Pension ownership is lowest among the self-employed
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- Figure 39: Active pension ownership, by working status, December 2013
- Gender gap in pension ownership and retirement savings
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- Figure 40: Active pension ownership, by gender, December 2013
Reasons for Lack of Active Pension Ownership
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- Key points
- Almost half of those not actively contributing to a pension have no retirement savings at all
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- Figure 41: Reasons for not contributing to a pension, December 2013
- Issue of dormant pension pots arises among the older age groups
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- Figure 42: Reasons for not contributing to a pension, by age, December 2013
Length of Pension Contribution Period
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- Key points
- Auto-enrolment increases recent workplace pension ownership at the expense of new personal pensions
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- Figure 43: Length of pension contribution period, December 2013
- Figure 44: Active pension ownership, by length of pension contribution period, December 2013
Value of Retirement Savings
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- Key points
- More than one in five non-retirees do not know the value of their retirement savings
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- Figure 45: Value of retirement savings, December 2013
- Value of retirement savings varies with financial priorities
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- Figure 46: Value of retirement savings, by age, December 2013
- Over-45s are risking their comfortable retirement
- Personal pension holders likely to save more towards retirement
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- Figure 47: Value of retirement savings, by most popular active pension ownership, December 2013
- Figure 48: Value of retirement savings, by gender and working status, December 2013
Sources of Pension Advice
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- Key points
- Internet and IFAs remain the most popular choices for pension advice
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- Figure 49: Sources of pension advice, December 2013 and 2012
- Figure 50: Number of sources of pension advice likely to be used, December 2013
- RDR reduces availability of advisers at banks and building societies
- Pension advice preferences vary with age
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- Figure 51: Sources of pension advice, by gender and age, December 2013
- Interest in pension advice is strongest among the young age groups
- Professional sources of advice preferred among those with greater savings
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- Figure 52: Sources of pension advice, by value of retirement savings, December 2013
- Personal pension owners most likely to choose IFAs for advice
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- Figure 53: Sources of pension advice, by most popular active pension ownership, December 2013
Attitudes towards Pensions and Retirement Savings
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- Key points
- Over two thirds of non-retirees are aware of auto-enrolment
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- Figure 54: Attitudes towards pensions and retirement savings, December 2013
- Saving for retirement in other ways is more appealing than pensions
- Interest in personal pension products is disappointingly low among the 45-54-year-olds
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- Figure 55: Level of agreement with statement ‘I am interested in using a personal pension product to help save for my retirement’, by gender and age, December 2013
- Figure 56: Level of agreement with statement ‘I am interested in using a personal pension product to help save for my retirement’, by working status and rate of tax paid, December 2013
- Employed individuals are still interested in personal pensions
- False optimism or wise foresight among the younger age groups?
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- Figure 57: Level of agreement with statements about retirement, by gender and age, December 2013
- Struggling 45-54-year-olds need support
- Auto-enrolment will intensify the need for pension pot consolidation
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- Figure 58: Attitudes towards pensions and retirement savings, by active pension ownership, December 2013
Appendix – Market Drivers
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- Figure 59: UK quarterly GDP* growth, Q4 2006-Q4 2013
- Figure 60: New insurer-administered occupational pension premiums, by sub-sector, 2007-13
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- Figure 61: Total new premiums for Group Personal Pensions (GPPs), 2009-13
- Figure 62: Volume and value of ISA subscriptions, by type of ISA, 2008/09-2012/13
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Appendix – Market Forecast
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- Figure 63: Forecast of new personal and individual stakeholder pension business (regular premiums only) – Best- and worst-case scenario, 2013-18
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Appendix – Channels to Market
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- Figure 64: New personal pension business, by sales channel, 2008-12
- Figure 65: New individual stakeholder pension business, by sales channel, 2008-12
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Appendix – Active Pension Ownership
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- Figure 66: Active pension ownership, by demographics, December 2013
- Figure 67: Active pension ownership, by demographics, December 2013 (continued)
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Appendix – Reasons for Lack of Active Pension Ownership
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- Figure 68: Reasons for not contributing to a pension, by demographics, December 2013
- Figure 69: Reasons for not contributing to a pension, by demographics, December 2013 (continued)
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Appendix – Length of Pension Contribution Period
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- Figure 70: Length of pension contribution period, by demographics, December 2013
- Figure 71: Length of pension contribution period, by demographics, December 2013 (continued)
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Appendix – Value of Retirement Savings
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- Figure 72: Value of retirement savings, by demographics, December 2013
- Figure 73: Value of retirement savings, by demographics, December 2013 (continued)
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Appendix – Sources of Pension Advice
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- Figure 74: Sources of pension advice, by demographics, December 2013
- Figure 75: Sources of pension advice, by demographics, December 2013 (continued)
- Number of sources of pension advice
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- Figure 76: Number of sources of pension advice likely to be used, by demographics, December 2013
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Appendix – Attitudes towards Pensions and Retirement Savings
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- Figure 77: Agreement with the statement ‘I am aware of the workplace pension automatic enrolment scheme being introduced by the government’, by demographics, December 2013
- Figure 78: Agreement with the statement ‘I would prefer to have only one pension scheme rather than manage several schemes’, by demographics, December 2013
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- Figure 79: Agreement with the statement ‘I would prefer to save for my retirement through a company/workplace pension scheme’, by demographics, December 2013
- Figure 80: Agreement with the statement ‘I think there are better ways to save for retirement than in a pension’, by demographics, December 2013
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- Figure 81: Agreement with the statement ‘I am interested in using a personal/individual pension product to help save for my retirement’, by demographics, December 2013
- Figure 82: Agreement with the statement ‘I am confident I will have enough saved to enjoy a comfortable retirement’, by demographics, December 2013
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- Figure 83: Agreement with the statement ‘I am planning to increase the amount that I am saving for my retirement in the next 12 months’, by demographics, December 2013
- Figure 84: Agreement with the statement ‘I am relying on my employer to make my pension arrangements’, by demographics, December 2013
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- Figure 85: Agreement with the statement ‘I am planning to seek professional advice about my pension options’, by demographics, December 2013
- Figure 86: Agreement with the statement ‘I am not interested in pensions or saving for my retirement’, by demographics, December 2013
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