Table of Contents
Introduction and Abbreviations
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- Retirement planning is an increasing necessity
- Planning goes beyond retirement date
- Pensions simplification adds a further impetus
- Report contents
- Global information and research
- Consumer research
- ACORN
- Abbreviations
Premier Insight
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- A sensible plan is required
- A-day and the popularity of SIPPs
- Supermarkets are a potential source of persuasion
- Aspiration is key
Executive Summary
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- Retirement planning an increasing necessity
- Managing the risks of living in retirement
- Longevity compounding the pension problem at the macro level
- Older consumers are acting younger
- Older one-person households
- Pension reform – a continuing theme for government
- Pensions simplification and other recent developments
- The consumer
- Main breadwinner tends to be main pensions owner
- Stakeholder pensions buck the lifestage ownership pattern
- A-day changes everything
- Distribution is the key
- Calling consumers to action
Market Factors
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- What is retirement planning and why is it important?
- Retirement planning is a complex process…
- …but necessary
- What the plan should do
- Managing the risks of living in retirement
- Longevity and other demographic considerations
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- Figure 1: UK population trends, by age group, 1994-2028
- Living longer…
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- Figure 2: Life-expectancy, by gender, at age 50 and at age 65, 1981-2020
- …but acting younger
- Older one-person households
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- Figure 3: Number of all UK households and one-person households, 1994-2009
- The number of marriages is in decline
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- Figure 4: UK marriages and divorces, 1964-2009
- Living longer, not working longer
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- Figure 5: Employment, by gender and age, 1992-2004
- Pensions simplification and other recent developments
- State pension only a safety net
- Basic state pension/Pensions Credit
- State Second Pension (S2P)
- Moving back to S2P
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- Figure 6: Percentage of population covered by selected pension types, 1978 and 2003
- Occupational pensions
- The investment climate is changing…
- ...and consumers await the effects of A-day
- Government downsizes estimates of relief paid on pensions
- Personal pensions
- Standard personal pensions
- Stakeholder pensions
- Self-invested personal pensions (SIPPs)
- Group personal pension (GPP)
- Pension reform – a continuing theme for government
- Pensions Act 2004
- Simplification should help promote pension provision
- Encouraging financial planning a key aim
- New retirement options include working longer
- Pensions Commission
- Employer Task Force
- The practicality of retirement planning – barriers to development
- Different lifestages bring different priorities
- The perceived role of the state
- Crisis of confidence in traditional pensions
- The macroeconomic picture
Market Size
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- Government measures will slow growth in the number of pensioners
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- Figure 7: Number of state pensioners, by gender, 1981-2011
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- Figure 8: Population growth estimates, by age group, 2003-28
- Benefits account for most of the average pensioner's income
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- Figure 9: Average gross weekly income of pensioner units at 2002/03 prices, 1994/95-2002/03
- Market structure
- Personal pension assets under management
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- Figure 10: Pension fund contributions, by type of scheme, 1995-2002
- Private pension provision
- Individual pensions business is still disappointing
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- Figure 11: New individual pensions business, 1999-2004
- Standard personal pensions bear the brunt of decline
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- Figure 12: New standard personal pensions business, 1999-2004
- Initial promise of stakeholder pensions not carrying through into new business
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- Figure 13: Regular-premium and single-premium stakeholder pension sales (non-employer-sponsored), 2001-04
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- Figure 14: Employer-sponsored stakeholder pension sales, 2001-04
- GPPs currently lead the market…
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- Figure 15: Value of new individual pensions business, by product type*, 1999-2004
- …but self-investment may have its day
- Non-pension investment products
- ISAs remain in demand as the pension market stagnates
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- Figure 16: Market value of funds held in stocks and shares ISAs and cash ISAs, 2000-04
- Property has strong and increasing appeal
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- Figure 17: Home ownership, by age group, 1993 and 2004
- Indicators of market size and potential
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- Figure 18: Penetration of savings and investment products, November 2004
- Pensions uncertainty may be a factor in general savings behaviour
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- Figure 19: Attitudes towards pensions, November 2004
- Risk aversion increases with age
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- Figure 20: Penetration of consumer financial products amongst over-45s, by age group as percentage of current account ownership, November 2004
- And how much do they actually save?
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- Figure 21: Average monthly savings of grey consumers, November 2004
- Property, the other factor in the retirement planning equation
- Uses of property in retirement
- Trading down
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- Figure 22: Cash house buyer characteristics, 2004
- Property as an investment
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- Figure 23: Buy-to-let mortgages outstanding and gross new advances, 1999-2004
- Equity release
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- Figure 24: Equity release mortgages, newly advanced, 1999-2004
Key Players
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- Providers
- The top five players account for roughly half of personal pensions business
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- Figure 25: Personal pensions providers in order of business ranking, by total UK net written premiums*, 2003
- Aviva is the highest-ranked provider
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- Figure 26: Personal pensions providers, by rank, 2002 and 2003
- Aviva forecasts improved growth in 2005
- Standard Life on a more even keel
- Other providers
- The advisers
- Changes in industry structure
- AWD is the leading pensions IFA in the UK
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- Figure 27: The top ten pensions IFAs, 2004
Distribution
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- Lack of planning leaves 2 million retirees in difficulties
- Sun to shine on pensions distribution?
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- Figure 28: Distribution of new regular-premium individual pensions, by value, 2000-04
- Single-premium pensions business to boom in 2006?
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- Figure 29: Distribution of new single-premium individual pensions, by value, 2000-04
- Specialist pension provision is even more strongly dominated by IFAs
- The Internet may become a crucial administration tool if not sales channel
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- Figure 30: Internet penetration, by age group, 2001-04
- Internet should work with not against IFAs
Consumer Financial Activity
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- Consumers are looking to refresh their finances
- Relationship with the main financial services providers
- Activity levels set to rise in the six months from March 2005
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- Figure 31: Savings, investment, borrowing and debt repayment – consumers’ expected activity, December 2003-March 2005
- Those aged 30-39 will be most active over the next few months
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- Figure 32: Expected financial activity, by socio-demographic and income groups, March 2005 and average for the last 13 quarters
- Consumers looking to build up savings
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- Figure 33: Leading financial activities planned in the next six months, March 2004-March 2005
- Mixed messages on housing activity
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- Figure 34: Intended mortgage and property purchase activity, December 2002-March 2005
- Lloyds TSB increases leading market share position
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- Figure 35: Leading main financial services providers: market shares, March 2004-March 2005
- RBS and Nationwide BS should boost their savings business
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- Figure 36: Saving, investment and lending market sizes, by expected customer demand and brand leaders (overall % intending to undertake activity in brackets), March 2005
- Bank of Scotland has the most ‘active’ customers
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- Figure 37: Activity levels of main financial providers’ customer bases, March 2005
The Consumer
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- Current pension provision
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- Figure 38: Ownership of pension products, March 2005
- Over half the non-retired population have no pension provision in place
- One in five non-retired adults will rely only on the state
- Occupational pensions remain the main type of provision
- Unhealthy reliance on spouse’s pension for one in 12 consumers
- Few consumers have more bespoke arrangements
- Lack of knowledge/awareness of pension arrangements widespread
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- Figure 39: Ownership of pension products, by gender, age and socio-economic group, March 2005
- Main breadwinner tends to be main pensions owner
- Younger consumers making some provision
- Pension ownership comes to prominence from age 35
- Strong correlation between pension ownership and socio-economic status
- Confirmation stakeholder pensions not reaching target group
- Stakeholder pensions buck the lifestage ownership pattern
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- Figure 40: Ownership of pension products, by lifestage and Mintel’s Special Groups, March 2005
- ABC1 third age consumers are the peak pension-owning individuals
- Internet usage is a predictor of pensions ownership
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- Figure 41: Ownership of pension products, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2005
- Broadsheet readers and light commercial TV viewers are main pension owners
- Waitrose shoppers are leading pension product owners
- Profile of those not retired who have no pension provision
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- Figure 42: Profile of entire sample and those without pension provision, by gender, age and socio-economic group, March 2005
- Wide spread of population unpensioned
- Why are the ‘unpensioned’ not contributing to a scheme?
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- Figure 43: Reason why those without a pension are not contributing to a scheme, March 2005
- Main barriers to pensions are economic and lack of knowledge
- Main reasons for having a pension vary significantly by demographic group
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- Figure 44: Main reasons why those without a pension are not contributing to a scheme, by gender, age and socio-economic group, March 2005
- The sexes hold similar views
- Lifestage effects clearly demonstrated
- Affordability affects lower socio-economic groups and aspiring C1s most
- Lifestage the main factor in affordability
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- Figure 45: Main reasons why those without a pension are not contributing to a scheme, by lifestage and Mintel’s Special Groups, March 2005
- Upmarket families mistrust pension companies
- Supermarket usage a good indicator of reasons for not contributing to a pension
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- Figure 46: Main reasons why those without a pension are not contributing to a scheme, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2005
- Newspaper readership and television viewing indicate some differences
- Supermarket users vary significantly in views
Consumer Attitudes and Targeting Opportunities
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- Incentives needed to persuade people to save more via a pension
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- Figure 47: Factors that would encourage consumers to save more into a pension scheme or another product for retirement, March 2005
- A third of population difficult to motivate to save for retirement
- Current retirement savings activity affects attitudes towards further saving
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- Figure 48: Factors that would encourage consumers to save more into a pension scheme or another product for retirement, by pension ownership, March 2005
- Pension holders are an aware audience
- Younger age groups are more hopeful, older age groups more pragmatic
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- Figure 49: Factors that would encourage consumers to save more into a pension scheme or another product for retirement, by gender, age and socio-economic group, March 2005
- Disillusionment sets in with age
- Responsibility weighs heavily on shoulders of family group consumers
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- Figure 50: Factors that would encourage consumers to save more into a pension scheme or another product for retirement, by lifestage and Mintel’s Special Groups, March 2005
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- Figure 51: Factors that would encourage consumers to save more into a pension scheme or another product for retirement, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2005
- Internet usage an indicator of interest in saving more into pensions
- Features that consumers would like to see offered as part of their pension
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- Figure 52: Features that consumers would like to see offered as part of a pension package, March 2005
- Information, information, information
- Stakeholder pension plan holders are the most demanding
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- Figure 53: Features that consumers would like to see offered as part of a pension package, by pension ownership, March 2005
- Bonuses appeal to stakeholder pension holders, discounts appeal to personal pension holders
- Men want information, women want advice
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- Figure 54: Features that consumers would like to see offered as part of a pension package, by gender, age and socio-economic group, March 2005
- Young consumers look for loyalty bonuses
- Broadsheet readers want information; mid-market tabloid readers want advice
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- Figure 55: Features that consumers would like to see offered as part of a pension package, by new technology users, newspaper readership, commercial TV viewing and supermarket usage, March 2005
- Safeway users prove to be atypical consumers
- Cross-analysis of data explains interest in advice and information
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- Figure 56: Features that consumers would like to see offered as part of a pension package, by factors that would encourage consumers to save more into a pension scheme or another product for retirement, March 2005
- Consumers who worry about retirement income want information and advice
- Most pension holders are fairly content
- Cluster 1 – Currently Content (58% of sample)
- Cluster 2 – Advice Seekers (28% of sample)
- Cluster 3 – Demanding (Want it All) (14% of sample)
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- Figure 57: Clusters in relation to desired pension features, by gender, age and socio-economic group, March 2005
- Repertoire of factors that would encourage people to save more
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- Figure 58: Repertoire of factors that would encourage people to save or invest more into a pension or another product for their retirement, by gender, age and socio-economic group, March 2005
The Future
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- A-day changes everything
- Distribution is the key
- Calling consumers to action
- Pensions are not the only game in town
- Compulsion has not gone away
- Working for longer
- Wrap accounts may increase the potential for retirement planning
- The changing role of the adviser
- Retirement planning seems certain to be a major growth area
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