Table of Contents
Issues in the Market
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- Key issues
Market Background and Definitions
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- Pension based retirement planning
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- Figure 1: Types of private pension provision in the UK
- Occupational schemes
- Individual pensions
- Group pensions
- Benefit structures
- Other definitions
- Non-Pension based retirement planning
- ISAs
- Buy-to-Let
- Equity Release
- Lifetime mortgages
- Home reversion
- Investment bonds from life offices
- Collective investments
- Abbreviations
- Advertising data
Insights and Opportunities
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- Shifting non-pension savings into personal pension business
- After the paying off the home the focus shifts to pensions
- Risk free pensions could get more people saving
- Marketing collectives as a ‘pension substitute’
Market in Brief
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- The market for Individual and occupational pensions
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- Figure 2: Total new premiums paid into individual and insurance- administred occupational pensions, 2003-07
- Non-Pension alternatives
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- Figure 3: Ownership of savings and investments outside a pension, June 2008
- People will be spending more time in retirement
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- Figure 4: Cohort life-expectancy at age 60, by gender, 1981-2054
- Affordability a major barrier to saving for retirement
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- Figure 5: Reasons for not saving, June 2008
- Intermediaries dominate distribution
- Key consumer research findings
- Investment Preferences and Barriers to Saving
- Retirement Plans
Fast Forward Trends
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- Trend 1: Generation Name Game
- Many young people unprepared to plan their own retirement
- Affordability and psychological barriers
- Trend 2: Home as Pension
- People continue to believe in property
- Positive attitudes to property will benefit the equity release market
Internal Market Environment
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- Key points
- Pension provision on the decline as firms look to reduce liability
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- Figure 6: Status of private and public sector schemes, 2007
- A migration towards DC occupational pension schemes…
- …but with inadequate contribution levels
- Active membership in the private sector in decline
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- Figure 7: Number of occupational scheme members, by membership type and sector, 1991-2007
- Some employees fail to enrol in company schemes
- Affordability a major issue
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- Figure 8: Reasons for not saving, June 2008
- Psychological barriers to saving
- Past slip-ups contribute to a lack of faith in retirement planning
- Personal accounts set to arrive by 2012…
- …with a variety of potential effects
- Legislative issues
- A-day changes aim to encourage greater pension participation
- …and also create new opportunities for providers
- Significant changes in Capital Gains Tax
- IHT and Equity release
- The Retail Distribution Review
Broader Market Environment
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- Key points
- More time being spent in retirement
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- Figure 9: Cohort life-expectancy at age 60, by gender, 1981-2051
- Old age dependency ratio to rise despite adjustments to retirement age
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- Figure 10: Projected size of the UK population, by age band, 2008-46
- Pensioner income squeezed as more time is spent in retirement
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- Figure 11: Average gross weekly income of pensioner units*, by age, 2006/07
- More attention on savings expected…
- …but current difficulties will make saving hard for many
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- Figure 12: Monthly changes in annual inflation rates* for RPI and CPI – UK, August 2001-August 2008
- Inflationary pressure on long-term investment returns
- More people likely to be working beyond retirement age
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- Figure 13: UK Economic activity, by gender and age, 2002-10
- Property wealth will increasingly be used to fund retirement
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- Figure 14: UK standardised average house prices (seasonally adjusted) 1995-2008
- Equity release to rise in popularity
Consumer Context
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- Key points
- Savings and debt repayment top the agenda
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- Figure 15: Savings, investment, borrowing and debt repayment – consumers’ expected activity, June 2007-June 2008
- Affluent and wealthy to increase activity levels
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- Figure 16: Expected financial activity, by socio-demographic and income groups, March 2008 and average for the last 23 quarters
- Prospects improve for life & pension providers
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- Figure 17: Intended life and pensions* activity Q3/Q4 2002-Q2 /Q3 2008
- Cash-based savings on the rise
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- Figure 18: Intended cash-based activities, Q3/Q4 2002-Q2 / Q3 2008
- Weak investor sentiment
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- Figure 19: Intended purchases of shares and equity-based unit trusts, government and corporate bonds and bond-based unit trusts and sales of equities and unit trusts, Q3/Q4 2002-Q2/Q3 2008
Strengths and Weaknesses in the Market
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- Figure 20: Retirement Planning – SWOT analysis, 2008
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Retirement Planning Product Ownership Overview
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- Key points
- Pension product ownership
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- Figure 21: Ownership of pension products, by type, June 2008
- Non-pensions retirement planning products
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- Figure 22: Ownership of savings and investments outside a pension, June 2008
Market Size – Pensions
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- Key points
- Individual vs. occupational pension schemes
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- Figure 23: Total new premiums paid into insurance-administered individual and occupational pensions, 2003-07
- Occupational Pension Scheme Size
- The private sector decline in employer support for pensions
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- Figure 24: Number of private sector occupational pension schemes in the UK, by scheme size, 2002-07
- Insurance-administered sector
- Rise in value of in-force business continues in 2007
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- Figure 25: Insurance-administered occupational pension business in force, 2003-07
- Lump-sum investment drives new business growth
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- Figure 26: New insurance-administered occupational pension business, 2003-08 H1
- Personal and group pensions
- A progressive decline in individual personal pensions in force business
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- Figure 27: Total number of policies and regular premiums from individual pensions business in force, by pension type, 2003-07
- Positive growth in new personal and group pension business
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- Figure 28: New individual pension premiums, by product type, 2003-07
- SIPPs and GPPs drive growth
Non-Pension Alternatives – Long term Savings and Investment
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- Key points
- Investment bonds
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- Figure 29: Total number of new single-premium investment bond contacts and value of new premiums, 2001-07
- Collective investments
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- Figure 30: Retail sales of unit trusts and OEICs by IMA members, 1998-2008
- ISAs
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- Figure 31: Amounts subscribed to ISAs, by cash and stocks and shares components, 2002/03-2007/08
- NS&I savings products
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- Figure 32: Amounts invested in NS&I annually and total funds held, 2001/02-2006/07
Non-Pension Alternatives – Property-based
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- Key points
- Buy-to-let
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- Figure 33: Value and volume of buy-to-let mortgages in the UK, 2000-08
- Equity release
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- Figure 34: Total volume of equity release sales and average value of loan by SHIP members, 1997-2007
Brand Communication and Promotion
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- Key points
- Retirement planning related adspend up by nearly a fifth in past year
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- Figure 35: Retirement planning related advertising expenditure, by sub-category, 2004-08
- Top three advertisers account for more than a quarter of total adspend
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- Figure 36: Retirement planning related advertising expenditure by the top twenty advertisers, 2004-08
- Majority of advertising through the press
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- Figure 37: Retirement planning related advertising expenditure, by media type, 12 months to June 2008
Channels to Market – Pensions
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- Key points
- Most pensions sold with advice
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- Figure 38: Sources of retirement planning advice, June 2008
- The EBC aspect of group pension sales
- Personal pensions
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- Figure 39: New APE* premiums into individual pensions, by distribution channel, 2003-07
- Tied agents lead sales of Individual stakeholder pensions
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- Figure 40: New regular premiums into individual pensions, by type of pension and distribution channel, 2007
- Bancassurance has a prominent role in stakeholder pension distribution
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- Figure 41: New regular premiums into individual pensions, via bancassurance, and by type of pension, 2005-07
Channels to Market – Non-Pension
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- Key points
- Investment bonds
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- Figure 42: Investment bond distribution mix based on new premiums, 2003-07
- Collectives
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- Figure 43: Proportion of unit trust/OEIC gross retail sales, by distribution channel, 2001-08
- Investment ISAs
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- Figure 44: Proportion of unit trust/OEIC ISA sales, by distribution channel, 2001-08
- Buy-to-let
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- Figure 45: Main channels to market – illustration, 2008
- Equity release
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- Figure 46: Value sales of equity release products from SHIP members, by distribution channel, 2003-07
The Consumer – Savings and Pension Ownership
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- Key points
- Savings gap yet to be closed
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- Figure 47: Ownership of pension products, by type, June 2008
- The haves and the have-nots
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- Figure 48: Ownership of pension products and retirement savings – cross-analysis, June 2008
- Picking the winnable battles
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- Figure 49: Type of pension owned. by gender, age, socio-economic group, working status and household income, June 2008
- Supplementing the pension…
- …and opening up new opportunities?
- Gaining perspective
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- Figure 50: Type of pension owned by marital status, lifestage, Mintel’s Special Groups and tenure, June 2008
- Broadsheet readers topping up their pension savings
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- Figure 51: Type of pension owned by region and ACORN category, new technology usage, and newspaper readership, June 2008
- Have a pension – but no idea what it’s worth
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- Figure 52: Value of pension fund, June 2008
- Slightly higher awareness among DC pension holders…
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- Figure 53: Value of pension fund, by type of pension owned, June 2008
- The gender gap – value and awareness
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- Figure 54: Value of pension fund, by gender and age group, June 2008
- ABs setting themselves for retirement
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- Figure 55: Value of pension fund, by socio-economic group, June 2008
- Outside pensions, cash rules…
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- Figure 56: Ownership of savings and investments outside a pension, June 2008
- …although ABs are prepared to spread their investments
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- Figure 57: Ownership of savings and investments outside a pension, by socio-economic group, June 2008
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- Figure 58: Most and least likely to own savings and investments outside a pension, June 2008
- Considerable gaps in coverage
- Pre-empting the regulators
The Consumer – Investment Preferences and Barriers to Saving
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- Key points
- The intentions are good…
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- Figure 59: Saving behaviour, July 2008
- …or good-ish, at least
- Last minute panic?
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- Figure 60: Saving behaviour, by gender, age, socio-economic group, marital status and lifestage, July 2008
- Home first – then pension?
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- Figure 61: Saving behaviour, by working status, household income, tenure, region, ACORN group and media usage, July 2008
- Is property still the investment of choice?
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- Figure 62: Best investment choice for the medium- to long-term, June 2008
- A bad choice – but for a good reason?
- Men take a punt on the markets
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- Figure 63: Best investment choice for the medium- to long-term, by gender, age, socio-economic group, marital status and lifestage, June 2008
- Online education?
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- Figure 64: Best investment choice for the medium- to long-term, by working status, household income, tenure, region, ACORN group and media usage, June 2008
- Affordability the main barrier
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- Figure 65: Reasons for not saving, by age, gender and socio-economic group, June 2008
- Recognise what can be changed, and what can’t
- Are pensions really unaffordable?
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- Figure 66: Savings priorities among those who say they can’t afford to contribute towards a pension, June 2008
- Affordability an issue, regardless of affluence
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- Figure 67: Reasons for not saving, by age, gender and socio-economic group, June 2008
- Apathetic youngsters, cash-strapped families
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- Figure 68: Reasons for not saving, by lifestage, June 2008
- First worry about the roof over your head
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- Figure 69: Reasons for not saving, by working and housing status, June 2008
- Learning lessons from past experience?
- An education in affordability?
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- Figure 70: Reasons for not saving, by media usage, June 2008
The Consumer – Retirement Plans
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- Key points
- Living in dreamworld?
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- Figure 71: Age planning to retire, by pension holders and non-pension holders, June 2008
- Or just trying not to think about things?
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- Figure 72: Age planning to retire, by pension holders and non-pension holders, June 2008
- Time to place cruise adverts in the broadsheets?
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- Figure 73: Age planning to retire, by household tenure, Region, ACORN group and media usage, June 2008
- How front of mind is retirement?
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- Figure 74: Agreement with the statement “I’m worried about what I’ll do for money when I’m retired”, June 2008
- Confidence among the dissenters?
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- Figure 75: Agreement with the statement “I’m worried about what I’ll do for money when I’m retired”, by pension ownership, June 2008
- How long are people’s time horizons?
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- Figure 76: Agreement with the statement “I'd rather live for today than worry about what might or might not happen in 20 or 30 years time”, June 2008
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- Figure 77: Agreement with the statement “I'd rather live for today than worry about what might or might not happen in 20 or 30 years time”, by pension ownership, June 2008
- Property squeezing out pension savings?
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- Figure 78: Agreement with the statement “My priority is getting onto/moving up the property ladder, not saving for retirement”, June 2008
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- Figure 79: Agreement with the statement “My priority is getting onto/moving up the property ladder, not saving for retirement”, by pension ownership, June 2008
- Youngest respondents care about property, not retirement
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- Figure 80: Agreement with statements regarding longer-term financial attitudes, by gender, age, affluence and lifestage, June 2008
- Home ownership – the ultimate security blanket?
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- Figure 81: Agreement with statements regarding longer-term financial attitudes, by working status, housing tenure, region, ACORN group and media usage, June 2008
- Changing time horizons
The Consumer – Further Analysis and Targeting Opportunities
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- Key points
- Key target groups
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- Figure 82: Key target retirement planning groups, June 2008
- Debt Burdened (29%)
- No Worries (34%)
- Restricted (14%)
- Sensible Savers (23%)
- Sensible Savers have the highest level of pension ownership
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- Figure 83: Key target retirement planning groups by pension ownership, June 2008
- Sensible Savers and the Restricted on opposite ends of the savings spectrum
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- Figure 84: Key target retirement planning groups by non-pension product ownership, June 2008
- Sensible Savers not saving in a pension likely interested in property
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- Figure 85: Key target retirement planning groups by barriers to saving in a pension, June 2008
- Repertoire analysis
- Final salary pension still top pension product owned
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- Figure 86: Pension product ownership by number of products owned, June 2008
- High ownership of cash based savings outside a pension
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- Figure 87: Non-pension financial product ownership by number of products owned, June 2008
Appendix – The Consumer: Pension Ownership and Saving
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- Figure 88: Non-pension savings, by socio-economic group, July 2008
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Appendix – The Consumer: Further Analysis
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- Figure 89: Key target retirement planning groups, by gender, age, socio-economic groups, lifestage, gross annual household income and tenure, June 2008
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- Figure 90: Pension financial product ownership repertoire by gender, age, socio-economic groups, lifestage, gross annual household income and tenure, June 2008
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- Figure 91: Non-pension financial product ownership repertoire by gender, age, socio-economic groups, Lifestage, gross annual household income and tenure, June 2008
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