Table of Contents
Executive Summary
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- The market
- Short-, medium- and long-term impact on the industry
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- Figure 1: Expected impact of COVID-19 on workplace pensions, short, medium and long term, 31 July 2020
- New premiums are forecast to fall by a quarter in 2020
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- Figure 2: Forecast of value of new insurer-administered workplace pension business (APE), 2015-25
- 77% of employees are enrolled in a workplace pension
- COVID-19 has hit contributions and fund values
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- Figure 3: Annual unemployment rate (forecast), 2007-24
- Reviews focus on value for money and protection for savers
- Companies and brands
- NEST is the biggest workplace pension provider
- Ethical and eco-friendly investing becomes a mainstream concern
- Above-the-line adspend fell to £12.2 million in 2019/20
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- Figure 4: Total above-the-line, online display and direct mail advertising expenditure on pension products* and advice, 2015/16-2019/20
- The consumer
- Three quarters of employees are enrolled in a workplace pension
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- Figure 5: Workplace pension enrolment, April 2020
- Significant confusion around pension types
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- Figure 6: Type of workplace pension enrolled in, by employment sector, April 2020
- Almost half don’t know how much they are contributing to their pension
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- Figure 7: Workplace pension contributions, April 2020
- High satisfaction with regularity of pension updates
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- Figure 8: Attitudes towards workplace pension communications and investments, April 2020
- Confidence in pensions understanding may be seriously misplaced
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- Figure 9: Consumers’ understanding of their workplace pension, April 2020
- Investment strategies must consider planned retirement dates
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- Figure 10: Consumer attitudes towards workplace pensions, April 2020
- What we think
Impact of COVID-19 on Workplace Pensions
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- How COVID-19 is reshaping the market
- Job losses and furloughing will dent contributions this year
- The crisis has highlighted the need for greater education and engagement
- The impact of COVID-19 on consumers
- No early signs of a COVID-19 rise in opt-out rates...
- …but concerns over fund performance could change retirement plans
- A boost in saving activity could benefit pensions
- ESG investing remains a growing area of consumer concern
- How brands are responding to COVID-19
- Pension firms are highlighting the threat of COVID-19-related scams
- Scottish Widows reiterates the value of increased flexibility in accessing funds
Issues and Insights
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- COVID-19 raises the need for pensions engagement and understanding
- The facts
- The implications
- The pension membership gender gap has closed but inequalities remain
- The facts
- The implications
- ESG investing is hitting the mainstream
- The facts
- The implications
The Market – What You Need to Know
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- New premiums are forecast to fall by a quarter in 2020
- 77% of employees are enrolled in a workplace pension
- COVID-19 has hit contributions and fund values
- Reviews focus on value for money and protection for savers
Market Size and Forecast
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- Outlook in light of COVID-19
- Short-, medium- and long-term impact on the industry
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- Figure 11: Expected impact of COVID-19 on workplace pensions, short, medium and long term, 31 July 2020
- Short-term impact (0-6 months)
- Medium-term impact (6-24 months)
- Long-term impact (2+ years)
- New contracts are down but premiums rose by 15% in 2019…
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- Figure 12: Volume and value of total new insurer-administered workplace pension business (regular and single premium business), 2015-19
- …and regular premiums rose by over a quarter
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- Figure 13: Volume and value of total new insurer-administered workplace pension business, by type of premium, 2015-19
- Insurer-administered DC schemes were worth £76 billion in 2018
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- Figure 14: Volume of insurer-administered DB and DC pension scheme members and value of premiums and assets under administration, 2018
- New business is tied to the performance of the jobs market
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- Figure 15: Forecast of value of new insurer-administered workplace pension business (APE), 2015-25
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- Figure 16: Forecast of value of new insurer-administered workplace pension business (APE), 2020-25
- Lessons from the financial crisis
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- Figure 17: Volume and value of total new insurer-administered workplace pension business (regular and single premium business), 2007-15
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- Figure 18: Volume and value of new insurer-administered workplace pension business, by type of premium, 2007-15
Trends in Workplace Pension Membership
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- Workplace pension membership has plateaued
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- Figure 19: Proportion of employees who are enrolled in a workplace pension, 2010-19
- Only 48% of private-sector part-time workers have a workplace pension
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- Figure 20: Proportion of employees who are enrolled in a workplace pension, by employment sector and working pattern, 2019
- Pension types are split between the public and private sectors
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- Figure 21: Type of workplace pension enrolled in, by employment sector, 2019
Market Drivers
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- The impact of COVID-19 on workplace pensions
- Unemployment is set to spike in 2020…
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- Figure 22: Annual unemployment rate (forecast), 2007-24
- …with the number of benefits claimants having already risen sharply
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- Figure 23: Unemployment benefit claimant rate, January 2007-May 2020
- Furloughing will hit contributions
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- Figure 24: Volume and value of Coronavirus Job Retention Scheme claims, 23 April-5 July 2020
- Fund values have fallen
- 10.3 million employees have been auto-enrolled into a workplace pension
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- Figure 25: Auto-enrolment declarations of compliance, May 2020
Regulatory and Legislative Changes
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- Expansion of auto-enrolment is still set for the ‘mid-2020s’
- Number of master trusts shrinks due to new authorisation regime
- Reviews focus on value for money and protection for savers
- Pensions Dashboards continue to be the subject of debate
- “Backto60” campaign set for Court of Appeal
- State pension ‘triple lock’ brought under threat as a result of COVID-19…
- …while the outbreak has forced MaPS to change priorities
- Call for quicker re-enrolment for COVID-19 pension dropouts
Companies and Brands – What You Need to Know
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- NEST is the biggest workplace pension provider
- COVID-19 raises fraud worries and calls for flexibility
- Ethical and eco-friendly investing becomes a mainstream concern
- Above-the-line adspend fell to £12.2 million in 2019/20
Provider Rankings
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- NEST is the biggest workplace pension provider
- Cardano Group completes acquisition of NOW: Pensions
- Rothesay Life regains market lead in trust-based pension business
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- Figure 26: Rankings of top 20 providers of trust-based pension business, by gross written premiums, 2016-18
- Individual and work-based rankings
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- Figure 27: Rankings of top 20 providers of individual and work-based pension business, by gross written premiums, 2016-18
Competitive Strategies
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- Firms face up to COVID-19-related scams
- Scottish Widows calls for pensions flexibility in times of crisis
- Ethical and eco-friendly investing is a mainstream concern
- PensionBee becomes founding partner of “Make My Money Matter”
- NEST steps up climate action
- Aviva launches ‘Stewardship lifestyle strategy’ for ethical investing
- NEST introduces choice of death benefit to help with tax considerations
- Revolut and Smart Pension team up for speedy auto-enrolment
Advertising and Marketing Activity
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- COVID-19 and the marketing mix
- Above-the-line adspend fell to £12.2 million in 2019/20
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- Figure 28: Total above-the-line, online display and direct mail advertising expenditure on pension products* and advice, 2015/16-2019/20
- Government campaigns made up two thirds of adspend in the last year
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- Figure 29: Top 10 advertisers of pension products* and advice, 2017/18-2019/20
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Reduced spending and state support have softened the blow of COVID-19
- Three quarters of employees are enrolled in a workplace pension
- Significant confusion around pension types
- Almost half don’t know how much they are contributing to their pension
- High satisfaction with regularity of pension updates
- Confidence in pensions understanding may be seriously misplaced
- Investment strategies must consider planned retirement dates
Consumer Confidence and the Impact of COVID-19
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- Financial wellbeing has survived the outbreak
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- Figure 30: The financial wellbeing index, January 2015-June 2020
- Reduced outgoings have limited the financial hit of COVID-19
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- Figure 31: How consumers have been affected or changed their behaviour as a result of COVID-19, 21-28 May 2020
- Finances are more likely to have declined than improved in the last year…
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- Figure 32: Changes in household finances, January 2015-June 2020
- …and a third are worse off since the start of the COVID-19 outbreak
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- Figure 33: Changes in financial situation since the start of the COVID-19 outbreak, 25 June-1 July 2020
- Confidence fell sharply when lockdown was announced
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- Figure 34: The financial confidence index, January 2015-June 2020
- Serious concerns about the impact of COVID-19 on jobs and the economy
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- Figure 35: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 18-24 June 2020
- Savings priorities have shifted since the outbreak started
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- Figure 36: Savings priorities, October 2019 vs May 2020
Workplace Pension Membership
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- Three quarters of employees are enrolled in a workplace pension
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- Figure 37: Workplace pension enrolment, April 2020
- Part-time work limits membership among younger and older workers
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- Figure 38: Workplace pension enrolment, by age, April 2020
- No early signs of a COVID-19 rise in opt-out rates
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- Figure 39: Workplace pension enrolment, March 2019 vs April 2020
Type of Workplace Pension Scheme
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- Significant confusion around pension types
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- Figure 40: Type of workplace pension enrolled in, by employment sector, April 2020
- Women should be the focus for raising awareness
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- Figure 41: Type of workplace pension enrolled in, by gender, April 2020
Workplace Pension Contributions
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- Almost half don’t know how much they are contributing to their pension
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- Figure 42: Workplace pension contributions, April 2020
- DB members have higher average contributions
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- Figure 43: Workplace pension contributions – rebase, by type of workplace pension enrolled in, April 2020
Workplace Pension Communications
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- Three quarters are happy with pension updates…
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- Figure 44: Attitudes towards workplace pension communications, April 2020
- …but only half have received information on retirement options
- Strong prospects for growth of digital services
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- Figure 45: Agreement with the statement “I have used/would be interested in using an app that gave me access to information about my workplace pension”, by age, April 2020
Understanding of Workplace Pensions
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- Confidence in pensions understanding may be seriously misplaced
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- Figure 46: Consumers’ understanding of their workplace pension, April 2020
- COVID-19 and pensions behaviours
Attitudes towards Workplace Pensions
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- Investment strategies must consider planned retirement dates
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- Figure 47: Consumer attitudes towards workplace pensions, April 2020
- Understanding does not extend to researching retirement needs
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- Figure 48: Agreement with selected attitudes towards workplace pensions, by response to the statement “I am confident I have all the information I need about my workplace pension”, April 2020
- Ethical and eco concerns peak among urban families
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- Figure 49: Agreement with the statement “It’s important to me that my workplace pension is invested in funds that have a positive impact on society (eg invested in companies with strong environmental values)”, CHAID – Tree output, April 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
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- Figure 50: Workplace Pensions – CHAID – Table output, April 2020
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