Table of Contents
Issues in the Market
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- Key points
- Market background and definitions
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- Figure 1: Types of private pension provision in the UK
- Occupational schemes
- Individual pensions
- Group pensions
- GPPs vs group stakeholder and group SIPPs
- GPPs provide significant benefits for employers
- Benefit structures
- Workplace pensions structure
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- Figure 2: Types of workplace pension, 2007
- Scheme administration
- Other definitions
- Abbreviations
Insights and Opportunities
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- Most members don’t want choice!
- Advice gap still an issue
- Teach the fundamentals of saving from an early age
- Women need more attention
Market in Brief
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- Scheme size and membership
- Workplace pensions structure and funding
- New insurance-administered business continues to grow in 2007
- Rising regulatory costs boost activity in the pensions buyout market
- UK pension funds reducing direct exposure to equities
- Insurance-administered pensions dominated by top five to ten providers
- Majority of insurance-administered business sold via intermediaries
- Consumer pension participation
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- Figure 3: Number of years making pension contributions, April 2008
Fast Forward Trends
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- Trend: finance in flux
- Living for today…
- …could mean an impoverished tomorrow
- Trend: over-optioned consumers
- Pension scheme members not making the most of their options
- But they wouldn’t know how to anyway
Internal Market Environment
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- Key points
- An occupational pension is the most desired employee benefit
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- Figure 4: Benefits most valued by employees, February 2008
- Declining pension provision as firms look to reduce liability
- Types of occupational scheme closure
- The shift towards DC occupational pension schemes
- DC contribution levels are inadequate
- Lack of member engagement
- But should members really be choosing their funds?
- Some not taking advantage of the company scheme
- Past mistakes contribute to a lack of faith in the industry
- Reforming the UK pension system
- Could legislative changes jeopardise confidence in pensions?
- The cost of PPF making things more difficult
- Pension buyouts all the rage these days…
- …but are insurers being too optimistic?
- A-day pensions simplification
- An administrative challenge…
- …but also new opportunities
- NPSS set to arrive by 2012…
- …with various potential impacts on the pensions market
- EU backs GPP auto-enrolment
- The role of the Pensions Regulator
- Putting more pressure on trustees…
- …and the developing shortage of qualified trustees
Broader Market Environment
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- Key points
- People will be spending more time in retirement
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- Figure 5: Cohort life-expectancy at age 60, by gender, 1981-2054
- Old age dependency ratio to rise as working age population declines
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- Figure 6: Projected size of the UK population, by age band, 2007-44
- Increased job mobility affects pension choice
- An increased focus on savings expected
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- Figure 7: Total personal disposable income (PDI), consumer expenditure and savings, 2003-13
- Pension fund asset allocation
- Volatile stock markets = volatile pension fund values
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- Figure 8: FTSE 100 and FTSE All Share – daily index movements, January 2000-April 2008
- Inflation reduces the value of pension savings
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- Figure 9: Average annual changes in the bank base rate, CPI and RPI – UK, 1998-2008
- GDP and unemployment projections
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- Figure 10: GDP growth and unemployment rate, 1998-2008
Competitive Context
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- Key points
- Alternatives and supplements to occupational and group pensions
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- Figure 11: Summary of retirement funding strategies
- Pensions and pension alternatives
- NPSS set to shake up the occupational and GPP market
- Non-pension opportunities
Strengths and Weaknesses in the Market
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- Figure 12: Occupational/group pensions – SWOT analysis, 2008
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Who’s Innovating?
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- Key points
- Tailored DC schemes
- Climate change investing and Religion-compliant pension funds
- Third-way solutions
- Salary sacrifice
Trade Perspective
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- Market development/Member participation
- Regulation
- Distribution
- Occupational and GPP outlook for 2008 and beyond
Scheme Size and Membership
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- Key points
- Declining employer support for pensions in the private sector
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- Figure 13: Number of private sector occupational pension schemes in the UK, by scheme size, 2002-06
- In 2006 just half the number of private sector schemes were open
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- Figure 14: Status of private and public sector schemes, 2006
- DC schemes greatly outnumber DB
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- Figure 15: Number of open and closed private sector single-section schemes, by benefit structure and size band, 2006
- Active membership in the private sector gradually decreasing
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- Figure 16: Number of occupational scheme members, by membership type and sector, 1991-2006
- Three quarters of active members were contracted out in 2006
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- Figure 17: Active members of private sector schemes, by route to being contracted out, 2006
Value of Funded Pensions
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- Key points
- In 2006 44% of pensions funds were in the self-administered sector
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- Figure 18: Value of assets in funded pensions, in real terms, 1997-2006
- A note about the data
Pension Contributions
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- Key points
- Employers aiming to reduce pension deficits
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- Figure 19: Contributions to private pension schemes, by scheme type – UK, 2001-06
Insurance-Administered Sector
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- Key points
- Growth in the value of in-force business in 2006
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- Figure 20: Insurance-administered occupational pension business in force, 2002-06
- Lump-sum investment propels new business growth
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- Figure 21: New insurance-administered occupational pension business, 2001-07
- Buyout market gains pace in 2007
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- Figure 22: New insurance-administered occupational pension business, by sub-sector, 2006 and 2007
- Forecast: Single-premium business will drive growth
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- Figure 23: Forecast of new insurance-administered occupational business, 2002-12
- GPP market size
- In-force GPP business
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- Figure 24: GPPs in force, 2002-06
- New GPP sales continue to increase
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- Figure 25: New GPP business, 2002-07
- Forecast: New GPP business will continue to expand
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- Figure 26: Forecast of new GPP business, 2002-12
- Factors incorporated
Market Share
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- Key points
- AEGON breaks into the top five occupational pension providers
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- Figure 27: Top 20 insurance companies in the occupational pensions market, by net premiums, 2005 and 2006
- A shuffle among the top three providers of individual pensions
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- Figure 28: Top 20 insurance companies in the individual pensions market, by net premiums, 2005 and 2006
Companies and Products
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- Supply structure
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- Figure 29: The main participants in the occupational pensions market
- Employers
- Insurance companies
- Prudential
- AEGON
- Standard Life
- Legal & General
- Canada Life
- Investment management
- Pensions IFAs
- Benefit consultants
- Other professional services
Brand Communication and Promotion
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- Key points
- Advertising company pensions directly to consumers is rare
- Pensions adspend nearly doubles over the past year
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- Figure 30: Pensions advertising expenditure, by sub-category, 2004-08
- Top ten provider adspend skyrockets
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- Figure 31: Advertising expenditure by the top ten pensions advertisers, 2007 and 2008
- Press used in over 50% of pension advertising
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- Figure 32: Pensions advertising expenditure, by media type, 12 months to April 2008
Channels to Market
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- Key points
- Majority of occupational and group personal pensions sold with advice
- The EBC element of group pension sales
- Little change in new regular-premium distribution for occupational pensions
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- Figure 33: Distribution breakdown of new insurance-administered occupational pension business – regular premium, 2001-07
- IFAs grab 85% of single-premium occupational pension business
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- Figure 34: Distribution breakdown of new insurance-administered occupational pension business – single premium, 2001-07
- IFAs continue to dominate regular- and single-premium GPP sales
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- Figure 35: Distribution breakdown of new insurance-administered GPP business – regular and single premium, 2002-07
- GPP sector especially reliant on advice
The Consumer: Pension Participation
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- Key points
- Occupational schemes still rule the roost
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- Figure 36: Proportion of adults who are active members of a pension, by type, April 2008
- The pension generation
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- Figure 37: Pension ownership, by age, April 2008
- Three fifths of full-time employees saving for the future…
- …but still gaps, even among higher earners
- Education – or cash?
- Taking responsibility for themselves…
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- Figure 38: Ownership of selected investment and protection products, by pension contributions, April 2008
- …but also relying on others
- Some cross-holdings – but not many
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- Figure 39: Multiple ownership of pension schemes, April 2008
The Consumer: Length of Contributions
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- Key points
- Serving their time
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- Figure 40: Number of years making pension contributions, by type of pension, April 2008
- The changing balance of pension schemes
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- Figure 41: Number of years making pension contributions, by type of pension, April 2008
- Making up for lost time?
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- Figure 42: Number of years making pension contributions, by age, April 2008
- The final-salary bonanza
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- Figure 43: Number of years making pension contributions, by household income, April 2008
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- Figure 44: Number of years making pension contributions, by gender, age, socio-economic group, marital status, lifestage, Mintel’s Special Groups, working status, household income, tenure, ACORN category, media usage and supermarket usage, April 2008
The Consumer: Attitudes and Experiences
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- Key points
- Making the case for final-salary schemes…
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- Figure 45: Attitudes and experiences of occupational and GPP pension scheme members, April 2008
- …could rely on affection, not retention
- Shortfall of advice, just where it’s needed the most?
- Choice – a niche concern
- Engagement far higher among men
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- Figure 46: Attitudes and experiences of occupational and GPP pension schemes, by gender and age, April 2008
- Don’t know, don’t want to know
- The draw of a high-end pension
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- Figure 47: Attitudes and experiences of occupational and GPP pension schemes, by socio-economic group and lifestage, April 2008
- Pensions become a major issue for full-timers
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- Figure 48: Attitudes and experiences of occupational and GPP pension schemes, by Mintel’s Special Groups and working status, April 2008
- Something for nothing?
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- Figure 49: Attitudes and experiences of occupational and GPP pension schemes, by Internet usage and newspaper readership, April 2008
- Flexibility and choice for higher earners
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- Figure 50: Attitudes and experiences of occupational and GPP pension schemes, by household income and technology usage, April 2008
- Pensions moving up the agenda?
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- Figure 51: Broader attitudes towards company pensions, April 2008
- Pensions a useful employment filter
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- Figure 52: Broader attitudes towards company pensions, by pension ownership, April 2008
- Time to save?
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- Figure 53: Broader attitudes towards company pensions, by gender and age, April 2008
- Realistic – or apathetic?
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- Figure 54: Broader attitudes towards company pensions, by socio-economic group and lifestage, April 2008
- Part-timers non-plussed by pension schemes?
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- Figure 55: Broader attitudes towards company pensions, by Mintel’s Special Groups and working status, April 2008
- Middle income earners stand to gain the most from compulsion
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- Figure 56: Broader attitudes towards company pensions, by household income and housing tenure, April 2008
- Keeping readers informed
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- Figure 57: Broader attitudes towards company pensions, by Internet usage and newspaper readership, April 2008
The Consumer – Further Analysis and Targeting Opportunities
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- Key points
- Four key groups
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- Figure 58: Occupational attitude groups, April 2008
- Defined Benefits
- Financially confident but still not interested
- Self-investors
- No pension, but savings
- The Apathetics
- Little interest – low ownership
- The Youngsters
- Summary
- Self-investors disillusioned?
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- Figure 59: Pension ownership, by attitudinal group, April 2008
- Self-reliant – but still looking for a little back-up
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- Figure 60: Attitudes towards pensions, by attitudinal group, April 2008
- Who are the key targets?
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- Figure 61: CHAID analysis of key attitudinal groups, April 2008
Appendix – Insurance-Administered Sector
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- Figure 62: Value of new regular-premium business, by scheme, 2003-07
- Figure 63: Value of new single-premium business, by scheme, 2003-07
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- Figure 64: Volume of new regular-premium business, by scheme, 2003-07
- Figure 65: Volume of new single-premium business, by scheme, 2003-07
- GPP Segments
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- Figure 66: GPPs in force, by type of policy, 2001-06
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Appendix – The Consumer: Pension Participation
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- Figure 67: Proportion of adults who are active members of a pension, by type, by gender, age, socio-economic group, age/socio-economic group, marital status and lifestage, April 2008
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- Figure 68: Proportion of adults who are active members of a pension, by working status, household income, tenure, ACORN group and TV region, April 2008
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- Figure 69: Proportion of adults who are active members of a pension, by media and supermarket usage, April 2008
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