Table of Contents
Issues in the Market
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- Key Issues
- Abbreviations
Insights and Opportunities
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- The busiest period for transfers has now passed
- Streamline back-office systems
- Technology offers new marketing opportunities
- Offer stability in times of change
Market in Brief
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- New business invigorated by pensions reform
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- Figure 1: Value of new individual pensions business, 2002-06
- Lloyds TSB Group was the largest individual pensions provider
- High-altitude trends in pensions
- Baby Boomers boom
- Rising interest rates have a bearing on consumer ability to save
- Pensions providers bid for NPSS work
- Competitor sectors grow
- Consumers are still wary of investing in pensions
- Green issues and new technology
- The majority of regular contributions are under £100 per month
Fast Forward Trends
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- Trend 1: Edutainment
- Definition
- Context
- Market touchpoints/implications
- Trend 2: Back To My Roots
- Definition
- Context
- Market touchpoints/implications
- Trend 3: Generation Why?
- Definition
- Context
- Market touchpoints/implications
Broader Market Environment
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- There will be increasing pressure on consumers to invest
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- Figure 2: Population growth projections, by age, 2004-29
- Ageing population affecting wide range of services
- Strong earnings results have underpinned growth in the stock market
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- Figure 3: FTSE 100 and FTSE All Share indices, January 1996-December 2006
- Base rate changes cause some consumers to examine their finances
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- Figure 4: Base rates, January 1992-January 2007
- PDI on the up
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- Figure 5: Personal disposable income, consumer expenditure, savings and the savings ratio, 2001-11
Internal Market Environment
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- Pensioners subsidise their lifestyle
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- Figure 6: Basic state pension entitlement, 2006/07
- S2P replaces SERPS
- 2012 will be a year of change for pensions
- 6.3 million personal pension members are in non-employer-sponsored schemes
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- Figure 7: Number of personal pension members, by type of scheme, 2005/06
- There were 1.7 million stakeholder pension members in 2005/06
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- Figure 8: Number of stakeholder pension members, by type of scheme, 2005/06
- The number of occupational pension schemes has reduced rapidly
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- Figure 9: Number of private sector occupational pension schemes, by scheme size, 2001-05
- 11 million consumers may benefit from the NPSS
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- Figure 10: Model of the pensionable population, 2004
- Providers bid for NPSS work
- Integration of Europe's financial markets
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- Figure 11: European timetable for MiFID, June 2006-November 2007
The Regulatory Environment
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- Personal pensions
- Encouraging investment in pensions through simplification
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- Figure 12: Pensions lifetime allowance and pensions annual allowance, 2006/07-2010/11
- Phased income drawdown and phased annuities
- Improved outcomes for consumers
- NPSS, and what it means for the pensions industry
- Free financial advice for consumers
- New legislation for pensions in 2008
Competitive Context
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- Servicing debt is a high priority for consumers
- ISAs offer a low-risk and limited commitment tax-free savings option
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- Figure 13: Number and value of ISAs, 2001/02-2005/06
- Property is perceived as a good investment
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- Figure 14: House prices in England and Wales, 1970-2006
- Equity release grows more appealing
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- Figure 15: Equity release, number of mortgage balances outstanding, 2002-06
Strengths and Weaknesses in the Market
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- Demand for pensions will increase
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- Figure 16: Strengths and weaknesses for the personal pensions market, February 2007
- The notion of equity release has grown more popular among consumers
Who’s Innovating?
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- Pensions providers await direction from the government
- Prudential increases ties with Capita
- Standard Life responds to churn
Trade Perspective
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- A-day has been a catalyst for advisers
- Development of investment platforms will deliver long-term value
- The housing market is vulnerable
- Development of PADA will be a key matter for the whole industry
Market Size and Forecast
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- New premiums have increased markedly across all sectors
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- Figure 17: Value of new individual pensions business, by product type, 2001-06
- Figure 18: New individual pensions premiums, by product type, 2001-06
- Increase in single-premium business
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- Figure 19: Total new premiums, all individual pensions, 2001-06
- The average contribution to a personal pension has increased
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- Figure 20: Average contributions to regular-premium individual pension schemes, Q3 2005 and Q3 2006
- Single-premium investment has increased in some quarters
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- Figure 21: Average contributions to single-premium individual pension schemes, Q3 2005 and Q3 2006
- Contributions from the self-employed tend to be higher
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- Figure 22: Personal and stakeholder pensions, average annual contribution, by employment status and earned income, 2005/06
- Renewed interest in standard personal pensions
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- Figure 23: New business, standard personal pensions, 2001-06
- Single-premium stakeholder pension business has fared best
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- Figure 24: New business, stakeholder pensions, 2001-06
- New business returns to pre-A-day levels
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- Figure 25: Forecast for value of personal and stakeholder pensions (current prices), 2001-11
- Factors used in the forecast
Market Share
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- Prudential was the top personal pensions provider in 2005
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- Figure 26: Personal pensions providers, 2004 and 2005
- Lloyds TSB Group was the largest individual pensions provider in 2005
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- Figure 27: Ranking of individual pensions providers, based on UK NWPs, 2003-05
Companies and Products
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- Fund performance varies markedly among providers
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- Figure 28: Best-performing unit-linked and with-profits pensions, January 2007
- Lloyds TSB Group
- Standard Life
- AVIVA plc
- AXA
- AEGON
Brand Communication and Promotion
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- Adspend on the up
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- Figure 29: Pensions advertising expenditure, by type of scheme, 2001/02-2005/06
- Newspaper advertising is favoured by individual pensions providers
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- Figure 30: Individual pensions advertising expenditure, by outlet, 2005/06
- Norwich Union Life Insurance is the top individual pensions advertiser
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- Figure 31: Top 20 individual pensions advertisers, 2005/06
Channels to Market
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- The cost of maintaining a salesforce favours IFAs
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- Figure 32: Distribution of new individual personal pensions, Q1-Q3 2006
- Pre-A-day demand for independent advice increased
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- Figure 33: Distribution of standard personal pensions, Q1-Q3 2006
- Nowadays stakeholder advice is for more affluent people
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- Figure 34: Distribution of individual stakeholder pensions, Q1-Q3 2006
Consumer Financial Activity
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- Testing times for FSPs
- Activity levels down again
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- Figure 35: Savings, investment, borrowing and debt repayment – consumers’ expected activity, September 2005-December 2006
- UK savings and spending climate
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- Figure 36: UK savings and spending climate – indexed, January 2001-January 2007
- Subdued picture across all sub-groups
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- Figure 37: Expected financial activity, by socio-demographic and income groups, December 2006 and average for the last 20 quarters
- Declining business across the board
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- Figure 38: Leading financial activities planned in the next six months, December 2005-December 2006
- Consumer intention to invest in pensions will decline further
- Mortgage providers may have to work harder for revenue
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- Figure 39: Intended mortgage and property purchase activity, December 2004-December 2006
- Identifying main financial services providers
- Abbey customers are the most ‘fairly’ active
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- Figure 40: Activity levels of main financial services providers’ customer bases, December 2006
- Halifax customers are savers
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- Figure 41: Activity intentions and current household financial situation, by MFSP, December 2006
The Consumer – Pension Ownership
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- Occupational pensions are most common type held among consumers
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- Figure 42: Pension ownership, November 2006
- A cash incentive could be the root to success
- The need to save for retirement grows more pressing with age
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- Figure 43: Pension ownership, by gender, age, socio-economic group and marital status, November 2006
- Implications and opportunities
- Consumer trust toward providers is still low
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- Figure 44: Pension ownership, by lifestage, age/socio-economic group, working status and tenure, November 2006
- Implications and opportunities
- Green pensions may appeal to consumers
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- Figure 45: Pension ownership, by gross annual household income, region and ACORN category, November 2006
- Implications and opportunities
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- Figure 46: Pension ownership, by newspaper readership, technology users, commercial TV viewing and supermarket usage, November 2006
- Implications and opportunities
The Consumer – Level of Regular Investment
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- Most pension holders contribute a modest amount
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- Figure 47: Level of pension contribution, November 2006
- Younger adults have more pressing concerns than a pension
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- Figure 48: Level of pension contribution, by gender, age, socio-economic group, marital status and lifestage, November 2006
- Implications and opportunities
- A stark choice between a home or a pension
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- Figure 49: Level of pension contribution, by age/socio-economic group, working status, gross annual household income and tenure, November 2006
- Implications and opportunities
- Mid-market tabloids are on the level
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- Figure 50: Level of pension contribution, by technology users, newspaper readership, commercial TV viewing and supermarket usage, November 2006
- Implications and opportunities
- GPPs draw a relatively high level of regular investment
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- Figure 51: Level of pension contribution versus pension ownership, November 2006
The Consumer – Attitudes Towards Stakeholder Pensions & General Attitudes Towards Pensions
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- There is a mixture of ignorance and apathy around stakeholder pensions
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- Figure 52: Statements for stakeholder pensions, November 2006
- The stakeholder pension is still off target
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- Figure 53: Statements for stakeholder pensions, by gender, age, socio-economic group and marital status, November 2006
- Implications and opportunities
- Employers are the key
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- Figure 54: Statements for stakeholder pensions, by lifestage, age/socio-economic group, working status and tenure, November 2006
- Implications and opportunities
- Consider targeting parents
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- Figure 55: Statements for stakeholder pensions, by gross annual household income, TV region and ACORN category, November 2006
- Implications and opportunities
- The limited appeal of stakeholder pensions negates advertising activity
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- Figure 56: Statements for stakeholder pensions, by technology users, newspaper readership, commercial TV viewing and supermarket usage, November 2006
- Implications and opportunities
- Personal pensions more likely to suit people outside the employer 'loop'
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- Figure 57: Pension ownership versus statements for stakeholder pensions, November 2006
- The case for tax-free pensions
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- Figure 58: General statements about pensions, November 2006
- Ongoing changes to the pensions landscape cause concern
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- Figure 59: General statements about pensions versus statements for stakeholder pensions, November 2006
- The offer of a property fund could tempt more affluent consumers
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- Figure 60: General statements about pensions, by gender, age, socio-economic group and marital status, November 2006
- Implications and opportunities
- Personal accounts may benefit private pensions providers in the long term
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- Figure 61: General statements about pensions, by lifestage, age/socio-economic group, working status and gross annual household income, November 2006
- Implications and opportunities
- Co-op responds to A-day changes
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- Figure 62: General statements about pensions, by technology users, newspaper readership, commercial TV viewing and supermarket usage, November 2006
- Implications and opportunities
- Consumer Typologies
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- Figure 63: Personal and stakeholder pension typologies, November 2006
- Mostly Uninterested
- Pro-pension
- May be Persuaded
- Unconvinced
- Self-employed people were most likely to be Unconvinced
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- Figure 64: Pensions typology groups, by gender, age, socio-economic group, lifestage and working status, November 2006
- Implications and opportunities
- Consumers more easily understand the housing market
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- Figure 65: Pensions typology groups, by gross annual household income, TV region, commercial TV viewing and supermarket usage, November 2006
- Implications and opportunities
- Small chunks of information may be used to create understanding
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- Figure 66: Statements about stakeholder pensions versus typology groups, November 2006
- Older and more affluent consumers are decent targets
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- Figure 67: CHAID analysis for level of pension contributions, November 2006
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