Stakeholder Pensions - UK - November 2005

INTRODUCTION AND ABBREVIATIONS
Getting to know the consumer
Key sources
Global information and research
Consumer research
ACORN
 ABBREVIATIONS
PREMIER INSIGHT
Getting the word out
Tesco…every little counts
I don’t trust pensions
Email reminders
Stakeholder speed dating
EXECUTIVE SUMMARY
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
An ageing population will put strain on the state system
Figure 1: Population growth estimates, by age group, 2000-10
Consumers who refuse to save can expect little from the state
Figure 2: Weekly state pension levels, 2005/06 tax year
Consumer saving is expected to increase
Figure 3: PDI, consumer expenditure, savings and saving ratio, 2000-10
Low base interest rate gives savers little incentive
Figure 4: The Bank of England base rate, October 1990-October 2005
The stock market is picking up
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
Pension contributions have risen faster than earnings
Figure 6: Average earnings and pension contribution indices, 2000-05
Company schemes are remarkably popular
Figure 7: Ownership of selected pension products, 2005
As many as 17 million people may be eligible for a stakeholder pension
Figure 8: Pension penetratiion in the UK, September 2005
Individual pension business
Figure 9: New individual pension business, 2000-05
More money is being invested in single-premium SHPs by fewer people
Figure 10: Single-premium stakeholder pension sales (non-employer-sponsored), 2001-05
Sales of regular-premium non-employer-sponsored SHPs are lagging
Figure 11: Regular-premium stakeholder pension sales (non-employer-sponsored), 2001-05
Employers can play an important role in stakeholder market
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
Figure 13: Illustration of volume sales of stakeholder pensions, by employer-sponsored and non-employer-sponsored, 2001-05
KEY PLAYERS AND THE COMPETITIVE ENVIRONMENT
One in four SHPs sold are from Norwich Union
Figure 14: Market share of new stakeholder business, 2003 and 2004
Room for retailers?
DISTRIBUTION AND THE INTERNET
IFAs are gaining more pensions business
Figure 15: Distribution of new APE individual pensions business, 2000-Q2 2005
When SHPs and IFAs don’t mix
Figure 16: Distribution of new stakeholder pension business, first half 2005
The Basic Advice process could make Internet sales a possibility
ADVERTISING AND PROMOTION
£4 million invested on government-sponsored ad campaign
Adspend on SHPs is low compared to other pension areas
Figure 17: Advertising expenditure on pensions, 2003/04 and 2004/05
Direct mail is the preferred advertising outlet for SHPs
Figure 18: Adspend on stakeholder pensions, by advertisers and by outlet, 2004/05
CONSUMER FINANCIAL ACTIVITY
Consumer confidence remains weak but prospects look more promising
Relationship with the main financial services providers
High levels of activity from June 2005 onwards
Figure 19: Savings, investment, borrowing and debt repayment – consumers’ expected activity, March 2004-June 2005
Younger respondents looking to refresh their financial affairs
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
Figure 21: Leading financial activities planned in the next six months, June 2004-June 2005
Housing indicators pick up sharply
Figure 22: Intended mortgage and property purchase activity, June 2003-June 2005
HSBC gains ground in terms of MFSPs
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
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
Figure 25: Adspend on stakeholder pensions, by advertisers and by outlet, 2004/05
THE CONSUMER AND PRODUCT OWNERSHIP
Only a small proportion of people have a stakeholder pension
Figure 26: Pension ownership, 2004 and 2005
SHPs make their mark on younger consumers
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
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
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?
Figure 30: Pension ownership, by newspaper readership, new techonology, commercial TV viewing and supermarket usage, September 2005
Implications and opportunities
Stakeholder owner profile
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
Figure 32: Source used to arrange a personal or stakeholder pension, 2004 and 2005
Implications and opportunities
A stakeholder what?
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
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
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
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
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
No money to invest
Figure 38: Reasons for not purchasing an SHP, September 2005
Repertoire
Figure 39: Number of reasons for not having a stakeholder pension, September 2005
I already have a pension
Figure 40: Repertoire analysis, by reasons for not investing in a stakeholder pension, September 2005
Implications and opportunities
Youngsters don’t make excuses
Figure 41: Repertoire analysis, by gender, age, socio-economic group and region, September 2005
Implications and opportunities
Typologies
18-24-year-olds are Broke
Figure 42: Consumer typologies, by gender, age, socio-economic group and region, September 2005
Implications and opportunities
One in five third agers are Suspicious
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
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
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
Figure 46: Stakeholder typologies, by pension ownership, September 2005
Implications and opportunities
Half of the target group have never heard of the product
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
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
Figure 49: Agreement to ‘My company has offered me a stakeholder pension’, by stakeholder typologies, September 2005
Implications and opportunities
INDUSTRY VIEWS
Lack of awareness
Distribution
Future issues
THE FUTURE
The state needs to step in
Will sales pick up?
A second wind
Distribution possibilities
Will poaching be a problem?
FORECAST
From which consumer groups will demand for SHPs come?
The three scenarios
The industry will face the same challenges in five years’ time
Figure 50: Scenario 1, 2005 and 2010
More consumers will be Prepared for retirement
Figure 51: Scenario 2, 2005 and 2010
Scenario 3 predicts an increase in the number of Broke consumers
Figure 52: Scenario 3, 2005 and 2010