Table of Contents
Overview
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- Key issues covered in this Report
- Products covered in this Report
- COVID-19: market context
- Economic and other assumptions
Executive Summary
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- The market
- Outlook in light of COVID-19
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- Figure 1: Expected impact of COVID-19 on individual pensions, short, medium and long term, August 2020
- Total new premiums expected to fall by 10% in 2020
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- Figure 2: Forecast of the value of new individual pension business, 2015-25
- Continued decline in SIPP new single-premium business expected
- Non-advised sales continue their gradual ascent
- Rising unemployment will hamper new and existing business
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- Figure 3: Annual unemployment rate (forecast), 2007-24
- FCA clamps down on questionable DB to DC pension transfers
- DWP leading efforts to increase pension take-up among the self-employed
- Companies and brands
- Royal London and Aviva lead in individual pensions market
- Hargreaves Lansdown is the largest SIPP provider
- Market leaders work to enhance their retirement product offerings
- New product developments continue to reshape the SIPP segment
- The consumer
- Consumer confusion over personal pension ownership
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- Figure 4: Type of pension owned, June 2020
- Those saving regularly into an individual pension the most engaged
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- Figure 5: Actions taken with individual and group pensions over the past 12 months, June 2020
- Just over two fifths of savers say COVID-19 has impacted their pension
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- Figure 6: Impact of COVID-19 outbreak on individual and group pensions, June 2020
- A third express interest in arranging an individual pension
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- Figure 7: Proportion of UK adults who would consider arranging an individual pension product in the future, June 2020
- Fees and charges most influential when choosing a provider
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- Figure 8: Important factors when choosing a personal pension provider, June 2020
- What we think
Impact of COVID-19 on the Individual Pensions Market
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- Impact on the market
- Job market malaise will hinder new business opportunities…
- …but many existing pension holders are in a strong position to maintain their contributions
- Increased government spending could lead to changes in pension tax relief
- Impact on consumers
- Two fifths of savers say their individual pension has been impacted by COVID-19
- One in four Millennials’ personal pension savers have reduced contributions
- Increased focus on savings could help boost demand for pensions
- Impact on companies and brands
- Providers act to provide guidance about avoiding COVID-19 pension scams
- The crisis has highlighted the value of enhanced control and flexibility
Issues and Insights
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- COVID-19 has opened a new opportunity to engage with the key target market
- Low-cost easy-to-manage products key to attracting new customers
The Market – Key Takeaways
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- Total new premiums expected to fall by 10% in 2020
- But sector is in a good position to weather the crisis
- Continued decline in SIPP new single-premium business expected
- Non-advised sales will continue to increase
- Regulatory activity will dampen transfer activity
- Longer-term projects have scope to drive new business opportunities
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 9: Expected impact of COVID-19 on individual pensions, short, medium and long term, August 2020
- Lockdown
- Re-emergence
- Recovery
- Individual pension market smaller following auto-enrolment
- COVID-19 hits new business prospects…
- …but H2 2020 should deliver an improvement in sales
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- Figure 10: New individual pension business, 2016-20
- APE expected to fall below £1.5bn in 2020
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- Figure 11: New individual pension business (APE), 2014-20
- Market forecast
- Improving consumer sentiment will provide a temporary boost
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- Figure 12: Forecast of the value of new individual pension business, 2015-25
- Figure 13: Forecast of the value of new individual pension business, 2020-25
- Market drivers and assumptions
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- Figure 14: Key drivers affecting Mintel’s market forecast (prepared on 18 August 2020), 2015-25
- Lessons from the financial crisis
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- Figure 15: New individual pension business, total value of new regular premiums, 2007-15
- Figure 16: New individual pension business, value of regular premiums, by type of pension, 2007-15
- Forecast methodology
Market Segmentation
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- Personal pension and insured SIPP new single premiums fall sharply
- FCA data also indicate a fall in the SIPP segment
- Regular premium stakeholder segment continues to shrink
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- Figure 17: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2016-19
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- Figure 18: Value of new individual personal pension, stakeholder pension and insured SIPP sales, 2016-19
- Transfer business falls sharply in 2019
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- Figure 19: Transfers as a share of new individual pension business, by product type, 2015-19
Channels to Market
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- Non-advised sales continue to rise
- IFAs remain the primary channel for new personal pension premiums
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- Figure 20: New individual personal pension business, by sales channel, 2015-19
- Non-advised sales are most prevalent in stakeholder pensions
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- Figure 21: New individual stakeholder pension business, by sales channel, 2015-19
- Most new insured SIPP business still done via IFAs
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- Figure 22: New individual insured SIPP business, by sales channel, 2015-19
- Streamlined SIPPs more commonly sold without advice
Market Drivers
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- Unemployment set to rise dramatically
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- Figure 23: Annual unemployment rate (forecast), 2007-24
- Number of self-employed workers drops following outbreak
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- Figure 24: Number of self-employed workers aged 16 years and older (seasonally adjusted), March to May 2010 to March to May 2020
- Saving in a pension a minority pursuit for the self-employed
- Self-employed numbers likely to be boosted over the longer term
- Financial market instability impacting pension fund values
- Workplace pension membership up sharply due to auto-enrolment
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- Figure 25: Proportion of employees who are enrolled in a workplace pension, 2010-19
Regulatory and Legislative Environment
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- DWP seeking to apply elements of auto-enrolment to the self-employed
- Pensions Dashboards remain a work in progress
- Pension tax relief under review
- FCA introduces sweeping changes to pension transfer advice
Companies and Brands – Key Takeaways
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- Price competition set to intensify in the low-cost SIPP market
- New product development focuses on flexible contributions
- Market leaders work to enhance their retirement product offerings
Market Share/Provider Rankings
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- Royal London and Aviva the market leaders
- Royal London records a decline in sales but grows market share
- Workplace pensions drive growth in pension sales at Aviva
- Prudential saw a decline in DB transfer business in 2019
- Scottish Widows posts mixed results
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- Figure 26: Rankings of top 20 providers of individual and work-based pension business, by gross written premiums, 2016-18
- Hargreaves Lansdown is the leading SIPP provider
- Other key players in the SIPP market
Competitive Strategies
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- Providers issue consumer warnings about COVID-19-related scams
- Market leaders increasing their focus on retirement planning
- Aviva creates new Investments, Savings & Retirement business division…
- …and takes complete ownership of Wealthify
- Prudential UK saving and investment business now part of M&G plc
- M&G acquires Ascentric platform from Royal London
- SIPP specialist Curtis Banks bolsters its offering via new acquisitions
- Interactive Investor acquires rival The Share Centre…
- …and offers a fee-free SIPP for a year in response to COVID-19
- Notable new product launches
- Vanguard’s new low-cost SIPP places pricing pressure on platforms
- Wealthify unveils SIPP with instant 25% tax relief on contributions
- Moneybox launches mobile SIPP offering following successful pilot
The Consumer – Key Takeaways
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- Reported financial well-being has been solid despite COVID-19 upheaval
- Opportunities for future pension consolidation
- Millennial pension savers are the most active users
- COVID-19 drives engagement in personal pensions
- Significant interest in personal pension ownership
- Ethical investment options are key to attracting younger savers
Impact of COVID-19 on Consumer Behaviours
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- Consumers’ sense of financial well-being has persevered
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- Figure 27: The Financial Wellbeing Index, January 2015-July 2020
- Reduced spending and government intervention has helped to stabilise household finances…
- More affluent professional workers may have scope to boost pension saving
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- Figure 28: How consumers have been affected or changed their behaviour as a result of COVID-19, 21-28 May 2020
- …however, more than a quarter are worse off since the start of the outbreak
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- Figure 29: Changes in financial situation since the start of the COVID-19 outbreak, 30 July-7 August 2020
- Widespread concern about impact on economic and job prospects
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- Figure 30: Consumer views on the impact of the COVID-19 outbreak on the UK economy and their own finances, 18-24 June 2020
- The outbreak has altered savings priorities
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- Figure 31: Savings priorities, October 2019 vs May 2020
Pension Ownership
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- Pension ownership has expanded greatly under auto-enrolment…
- …but individual pension ownership remains relatively low
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- Figure 32: Type of pension owned, June 2020
- The self-employed are a compelling but difficult to reach target market…
- …but upcoming developments should boost sales in coming years
- Multiple pension ownership increasingly common
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- Figure 33: Number of pension pots owned, by pension ownership, June 2020
Active Pension Scheme Participation
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- One third of pension owners are contributing to an individual pension
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- Figure 34: Proportion making regular contributions into their pension(s), June 2020
- Stakeholder pension owners most likely to be contributing regularly
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- Figure 35: Proportion making regular contributions into their pension(s), by pension ownership, June 2020
- 25% active in a workplace scheme also adding to an individual pension
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- Figure 36: Proportion making regular contributions into their pension(s), by type of pension being regularly contributed to, June 2020
Recent Individual Pension Activity
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- Half have reviewed their pension in the past year
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- Figure 37: Actions taken with individual and group pensions over the past 12 months, June 2020
- Fewer than a fifth of over-55s have started to draw on their pensions
- Heightened level of engagement among active individual pension owners
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- Figure 38: Actions taken with individual and group pensions over the past 12 months, by type of pension being regularly contributed to, June 2020
- Millennials have been particularly active in the past year
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- Figure 39: Actions taken with individual and group pensions over the past 12 months, by generation, June 2020
Impact of COVID-19 on Management of Personal Pensions and SIPPs
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- More than two fifths say COVID-19 has had an impact on their behaviour
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- Figure 40: Impact of COVID-19 outbreak on individual and group pensions, June 2020
- Few over-55s say their retirement plans have been altered
- Millennials are the most likely to have modified contribution levels
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- Figure 41: Impact of COVID-19 outbreak on individual and group pensions, by generation, June 2020
- Opportunity for providers to help savers keep up with contributions
Interest in Arranging a Personal Pension or SIPP
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- A third of UK adults would consider getting an individual pension
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- Figure 42: Proportion of UK adults who would consider arranging an individual pension product in the future, June 2020
- Lack of widespread interest among the self-employed
- Encouraging level of interest among younger generations
- Nearly half who have group scheme would consider an individual one
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- Figure 43: Proportion of UK adults who would consider arranging an individual pension product in the future, by pension ownership, June 2020
Important Factors When Choosing a Personal Pension Provider
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- Fees and charges top the list of important features
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- Figure 44: Important factors when choosing a personal pension provider, June 2020
- Younger savers most likely to value social responsibility
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- Figure 45: Selected important factors when choosing a personal pension provider, by generation, June 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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