This report examines two key pension products in the UK individual pensions market: the personal pension and the stakeholder pension. As the UK pensions industry attempts to keep up with extensive changes sweeping through all areas of retirement provision in the UK, it can be safely said that the pensions industry is in a state of flux. The sector is still absorbing recent and extensive regulatory changes while, at the same time, it prepares for a new pensions regime beginning in April 2006. In addition to this, the industry will have to absorb and formulate strategies that take into account recent Pensions Commission proposals to radically overhaul future state and private pension provision.

The industry is adjusting to the recent introduction of stakeholder products; new guidelines governing the way customers receive and pay for pension advice and the creation of new distribution channels such as the ‘multi-tied adviser’. While pension providers continue to develop new products and strategies to accommodate such changes, they must also draw breath and think carefully about the immediate future; because the pension landscape is about to change. Creating the most radical overhaul of the pensions system in 50 years, ‘pensions simplification’ will take effect on 6 April 2006. Otherwise known as ‘A-day’, simplification will bring changes to the way in which consumers contribute to pensions, potentially impacting the features of almost every individual pension product on the market. However, once the dust settles, the overhaul may well stimulate consumer retirement saving, as it will make pension provision less complex.

In addition to these recent and immediate changes to private provision, the industry must also consider any proposed alterations to state pension provision. November 2005 witnessed the publication of Lord Turner’s Pensions Commission report, recommending revised basic state and state second pensions, adjustments to the state pension age and a brand new National Pension Saving Scheme (NPSS). Such changes, which could be implemented by 2010, will provide a completely new blueprint from which the private pension industry must take its cues. Therefore, with changes occurring in all areas of pension provision, it is little wonder that not only is the industry in a state of flux, but evidence suggests that the consumer is also struggling to make informed choices about private pension provision. This report attempts to tackle these and other issues with specific reference to personal and stakeholder pensions.