Table of Contents
Introduction and Abbreviations
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- Report contents
- Methodology
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- Consumers need a more positive attitude towards retirement planning
- Some players say legislation is the only solution
- Advertising needs to be focused
- Next year’s stakeholder launch provides good opportunity to re-promote SHPs
- Encourage parents and grandparents to invest in SHPs for children
- Children should be taught the importance of saving
- Increase communications with IFAs
Executive Summary
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- The level of pension credit could decline in the future
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- Figure 1: Basic state pension levels, 2004/05 tax year
- Consumers are suspicious of risk-based investments
- The personal pensions market was boosted by the introduction of SHPs
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- Figure 2: New individual pensions business, 2000-04
- Regular-premium sales retain their position
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- Figure 3: Regular-premium stakeholder pension sales (non-employer-sponsored), 2001-Q2 2004
- Key players
- Most individual pensions business is arranged through IFAs
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- Figure 4: Distribution of new APE individual pensions business, by main channel, Q1 2003-Q2 2004
- More consumers dealt directly with pension companies
Market Factors
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- SHP charge cap increases by 0.5%
- Government consultation document on stakeholder pensions
- The ageing population could result in a falling number of workers
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- Figure 5: Population growth estimates, by age group, 2002-27
- Pay now or retire later
- The state pension continues to guarantee a minimum income for non-savers
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- Figure 6: State pension levels, 2004/05 tax year
- Savings credit – for prudent savers?
- The savings ratio is projected to increase
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- Figure 7: PDI, expenditure and savings ratio, at current prices, 1999-2009
- Personal pension holders have seen the projected value of their investments stagnate
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- Figure 8: FTSE 100 index, January 1996-September 2004
- Some consumers will be affected by even the smallest base rate rise
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- Figure 9: Bank of England base rate, January 1992-October 2004
- Buy-to-let is experiencing a period of exceptional growth
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- Figure 10: Gross volume and value of new buy-to-let mortgages (half-yearly), 1999-2004
- Work-based contributions
- Opposition party policies
- The Pensions Commission
- The House of Lords is scheduled to debate the pensions bill
- Equity release schemes could partly cover the cost of retirement
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- Figure 11: Total sales of equity release products, 2002 and 2003
- Government downsizes relief paid on pensions
Market Size
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- Investment in personal pensions peaked in 2002
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- Figure 12: Average earnings and personal pension contributions – indices, 1999-2003
- Data clearly show the superior appeal of contributory schemes
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- Figure 13: Ownership of selected pension products, 2003
- A significant increase in new business over the last decade
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- Figure 14: New individual pensions business, 1995-2004
- Providers are encouraged to re-promote their SHP products
- Last year 85,000 new single-premium contracts were sold
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- Figure 15: Single-premium stakeholder pension sales (non-employer-sponsored), 2001-Q2 2004
- New regular-premium sales decline
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- Figure 16: Regular-premium stakeholder pension sales (non-employer-sponsored), 2001-Q2 2004
- The value of single-premium employer contracts totalled £227 million in 2003
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- Figure 17: Employer-sponsored stakeholder pension sales, 2001-Q2 2004
Key Players
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- The top five players account for two thirds of market share
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- Figure 18: Stakeholder business, market share, 2003
- Minimum premiums guarantee providers a minimum size investment fund
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- Figure 19: Representative stakeholder pension product details, September 2004
- Company profiles
- Norwich Union
- Standard Life
- AXA Sun Life
- Scottish Widows
- Clerical Medical
- Friends Provident uses technology to smooth SHP process
Distribution
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- Most people seek advice from an IFA when arranging a pension
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- Figure 20: Distribution of new APE individual pensions business, by main channel, 2001-Q2 2004
- IFAs dominate single-premium SHP business
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- Figure 21: Distribution of new stakeholder pension business, Qtr 1 and Qtr 2 2004
- Internet distribution
Advertising and Promotion
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- Advertising spend reduced by almost three quarters
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- Figure 22: Pension advertising expenditure, by product category, 2002 and 2003
- Advertising spend on stakeholder pensions
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- Figure 23: Stakeholder pension advertising expenditure, by provider, 2002 and 2003
- Getting the message across
- Brand image and creating trust
- Provider promotions in 2004/05
Consumer Financial Activity
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- Cautious mood of consumers in relation to saving, investing and borrowing
- Demand on the main financial services providers
- Borrowing, saving and debt repayment – diminished activity going forward
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- Figure 24: Savings, investment, borrowing and debt repayment – consumers’ expected activity, 2002-04
- All groups will be less financially active
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- Figure 25: Expected financial activity, by socio-demographic and income groups, June 2004 and average for the last ten Quarters
- Investments and pension contributions look set to suffer
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- Figure 26: Leading financial activities planned in the next six months, 2002-04
- Mortgage market may now be turning
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- Figure 27: Intended mortgage and property purchase activity, 2002-04
- Halifax and NatWest were strong in the latest quarter
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- Figure 28: Leading main financial services providers: market shares, 2003-04
- Nationwide BS should see significant ISA business
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- Figure 29: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), June 2004
- 65% of RBS customers intend to be financially active
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- Figure 30: Activity levels of main financial providers’ customer bases, June 2004
The Consumer
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- SHP sales could recover in 2005
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- Figure 31: Details of pension plan ownership, August 2004
- Employers can offer a perceived secure investment choice for some
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- Figure 32: Pension ownership, by gender, age and socio-economic group, August 2004
- Just over a tenth of consumers contribute to a non-SHP personal pension scheme
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- Figure 33: Pension ownership, by marital status, lifestage, working status and gross annual household income, August 2004
- An opportunity exists to promote in-store
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- Figure 34: Pension ownership, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, August 2004
- Providers are waiting to see if proposed legislation provides more financial opportunities
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- Figure 35: Source used to arrange a stakeholder/personal pension, August 2004
- Men and 35-44-year-olds more likely to arrange a pension through an IFA
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- Figure 36: Source used to arrange stakeholder/personal pension, by gender, age and socio-economic group, August 2004
- Consumers in the family lifestage are more likely to arrange their SHP on the high street
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- Figure 37: Source used to arrange stakeholder/personal pension, by marital status, lifestage and Mintel’s Special Groups, August 2004
- A tenth of respondents said that they sourced their pension from an accountant, stockbroker or solicitor
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- Figure 38: Source used to arrange stakeholder/personal pension, by working status, gross annual household income and tenure, August 2004
- People living in the North West and Scotland more likely to arrange their pension using a direct pension company
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- Figure 39: Source used to arrange stakeholder/personal pension, by TV region and ACORN category, August 2004
- Internet users are more likely to organise their pension with an IFA
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- Figure 40: Source used to arrange stakeholder/personal pension, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, August 2004
Consumer Attitudes and Targeting Opportunities
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- Some 44% of respondents have still never heard of SHPs
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- Figure 41: Level of agreement with three statements about SHPs, August 2004
- Ds are more likely to be thinking about arranging an SHP
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- Figure 42: Level of agreement with three statements about SHPs, by gender, age and socio-economic group, August 2004
- Pre-/no family lifestagers and full-time workers were more likely to be considering an SHP
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- Figure 43: Level of agreement with three statements about SHPs, by marital status, lifestage, working status and gross annual household income, August 2004
- Safeway shoppers are more likely to be thinking about an SHP
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- Figure 44: Level of agreement with three statements about SHPs, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, August 2004
- Just under a tenth do not trust the pensions industry
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- Figure 45: Reasons for not purchasing an SHP, in order of importance, August 2004
- Young people more likely to defer pension planning
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- Figure 46: Main reasons for not purchasing an SHP, by gender, age and socio-economic group, August 2004
- Not married less likely to be able to afford an SHP
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- Figure 47: Main reasons for not purchasing an SHP, by marital status, lifestage and Mintel’s Special Groups, August 2004
- Faced with similar problems to Britain other countries have introduced compulsion
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- Figure 48: Main reasons for not purchasing an SHP, by working status, gross annual household income and tenure, August 2004
- Those in the South have least trust in the pensions industry
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- Figure 49: Main reasons for not purchasing an SHP, by TV region and ACORN category, August 2004
- Waitrose shoppers more likely to have made other arrangements
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- Figure 50: Main reasons for not purchasing an SHP, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, August 2004
- Consumer typologies/clusters
- Consumers say that they do not trust the pensions industry
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- Figure 51: Consumer typologies, by gender, age, socio-economic group and working status, August 2004
- An SHP will be attractive to parents who want to give their children an early start in saving
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- Figure 52: Consumer typologies, by gross annual household income, tenure, TV region and ACORN category, August 2004
- One in five consumers believe pensions are a good way of saving
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- Figure 53: Consumer typologies, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, August 2004
- Full-time workers are the common denominator
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- Figure 54: Analysis of SHP main target groups using CHAID, August 2004
Industry Views
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- Market size
- Advertising expenditure
- Internet distribution
The Future
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- Positives which can be taken from the introduction of SHPs
- Will employer-sponsored schemes succeed without compulsion?
- Is the government’s target group realistic?
- Does pension credit stifle future market growth?
- Growing pains continue
- Rising base rates
Forecast
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- Figure 55: Forecast of the number of people who are thinking about getting a stakeholder pension, 2004-09
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