Table of Contents
Issues in the Market
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- Key issues
- Market background and definitions
- The pensions landscape
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- Figure 1: Types of private pension provision in the UK
- Occupational schemes
- Individual pensions
- Group pensions
- Benefit structures
- Other definitions
- Abbreviations
- Advertising data
Insights and Opportunities
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- A maligned sector of the market may be the key to a vibrant future
- Four key sources of new seed capital for the SIPP market
- Look to post-retirement as well as pre-retirement
- Paying the price for past mistakes
Market in Brief
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- Transfers and portfolio rationalisation drive the market
- Market dominated by a handful of firms
- Channels to market and advertising
- The consumer – high-end products, with high-end customers
- The consumer – IFAs still the key route to market
Fast Forward Trends
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- Trend 1: Rethinking Business, Capitalism and Consumerism
- What's it about?
- What we've seen
- SIPPs – the self-select ethical option
- Trend 2: Supernanny State
- What's it about?
- What we've seen
- Going against the trend…
- …and going it alone
Internal Market Environment
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- Key points
- The pensions environment
- Pension provision on the decline as firms look to reduce liability
- Within the occupational sector, a migration towards DC occupational pension schemes
- The past provides a positive environment for SIPPs
- Personal Accounts may provide further impetus for the SIPP sector
- A variety of possible effects
- Legislative issues
- A-day changes aimed to encourage greater pension participation
- New opportunities from legislation
- Regulatory considerations
- SIPP providers now fully regulated
- Retail Distribution Review
- Review of the suitability of SIPP and personal pensions advice
- Protected rights funds made eligible for full SIPP investment
- Consumer financial activity
- Savings and debt repayment top the agenda
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- Figure 2: 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 3: Expected financial activity, by gender, age, socio-economic group, household income and working status, March 2008 and average for the last 23 quarters
- Prospects improve for life and pension providers
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- Figure 4: Intended life and pensions* activity, Q3/Q4 2002-Q2/Q3 2008
Broader Market Environment
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- Key points
- Target market begins to expand
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- Figure 5: Size and segmentation of the target wealth market based on investible assets, 2003 and 2008
- More time being spent in retirement
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- Figure 6: Cohort life-expectancy at age 60, by gender, 1981-2051
- Changing circumstances already demand greater focus on saving for retirement
- Inflation and recession put pressure on long-term investment returns
- More people likely to be working beyond retirement age
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- Figure 7: UK economic activity, by gender and age, 2002-10
- Property wealth will increasingly be considered as a source of income in retirement
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- Figure 8: UK standardised average house prices (seasonally adjusted) 1995-2008
Competitive Context
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- Key points
- SIPPs fighting competition on two fronts
- The potential SIPP market is relatively clearly defined
- The pre-retirement segment
- Non-pensions retirement-planning products
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- Figure 9: Ownership of savings and investments outside a pension, June 2008
- Buy-to-let
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- Figure 10: Value and volume of buy-to-let mortgages in the UK, 2000-08
- Faith in property as a pension has plummeted this year
- Collective investments
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- Figure 11: Retail sales of unit trusts and OEICs by IMA members, 1998-2008
- ISAs
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- Figure 12: Amounts subscribed to ISAs, by cash and stocks and shares components, 2002/03-2007/08
- The in-retirement segment
Strengths and Weaknesses in the Market
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- Figure 13: Self-invested personal pensions – SWOT analysis, 2008
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Who’s Innovating?
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- Key points
- Technology and marketing drive innovation
- Suffolk Life
- Standard Life (August 2008)
- AJ Bell
- Hargreaves Lansdown
Trade Perspective
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- Development of the SIPP market
- Industry structure and issues
- Key players and their activities
- Marketing and distribution developments and issues
- Consumer considerations
- Regulation and legislation
- The future
Market Size and Forecast
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- Key points
- Rapid growth in the market
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- Figure 14: New individual pension premiums, by product type, 2003-08
- Strong market growth driven by a combination of positive factors
- A golden age; but will it last?
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- Figure 15: Estimated impact of pension transfer business, 2008
- Organic growth likely to be more important in future
- Estimated £50 billion under management
- Storm clouds are building
- Market fragmentation is also a negative factor
- e-SIPP attracting a new younger audience
- Protected rights – a new impetus for the market
- Forecast
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- Figure 16: Forecast of new individual APE premiums, by product type, 2003-13
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- Figure 17: Forecast of all new APE premiums, by product type, 2003-13
- Factors used in the forecast
Market Share
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- Key points
- Determining market share is a challenge
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- Figure 18: SIPP market share, by value of in-force business, September 2008
- The insured SIPP sector is highly concentrated
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- Figure 19: Insured SIPPs market shares, September 2008
- Fully invested SIPP market is increasingly competitive
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- Figure 20: Fully self-invested SIPP market shares, September 2008
Companies and Products
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- Key points
- James Hay
- Standard Life
- Aegon Scottish Equitable
- AJ Bell
- Suffolk Life
- Hornbuckle Mitchell
- Hargreaves Lansdown
- AXA
- Other SIPP providers
Brand Communication and Promotion
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- Key points
- Pensions advertising spend is negligible
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- Figure 21: Financial service media advertising, 2006/07 and 2007/08
- Figure 22: Retirement planning-related advertising expenditure, by sub-category, 2003/04-2007/08
- Marketing processes for SIPPs generally do not justify main media expenditure
- But there are exceptions
- Majority of advertising through the press
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- Figure 23: Retirement planning-related advertising expenditure, by media type, 2007/08
Channels to Market
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- Key points
- Most pensions sold with advice
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- Figure 24: Sources of retirement-planning advice, June 2008
- Formal advice focused on IFAs
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- Figure 25: New APE* premiums into individual pensions, by distribution channel, 2003-07
- Banks still fringe players in the SIPP sector
- Pensions advice dominated by generalist IFAs
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- Figure 26: Leading pensions IFAs, 2008 (based on 2007 income)
The Consumer – SIPPs and Attitudes towards Saving
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- Key points
- SIPPs very much a minority product despite strong market growth
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- Figure 27: Ownership of pension products, by type, June 2008
- Comparing and contrasting characteristics of personal pension holders highlights SIPP investor profile
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- Figure 28: Ownership of selected pension products, by gender, age, socio-economic group and marital status, June 2008
- Older, more affluent consumers confirmed as key market for SIPPs
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- Figure 29: Ownership of selected pension products, by lifestage, Mintel’s Special Groups, working status, income and housing tenure, June 2008
- Technology usage a key identifier of SIPP ownership
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- Figure 30: Ownership of selected pension products, by TV region, technology usage, newspaper readership and education level achieved, June 2008
- Implications
- The value of existing pension funds may provide a clue to the market potential
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- Figure 31: Value of pension holdings, June 2008
- Some mainstream potential
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- Figure 32: Value of pension holdings above £50,000, by gender, age, socio-economic group and marital status, June 2008
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- Figure 33: Value of pension holdings above £50,000, by lifestage, household income and housing tenure, June 2008
- Londoners top pension charts
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- Figure 34: Value of pension holdings above £50,000, by region, ACORN group, technology usage, internet usage, newspaper readership and education level, June 2008
- Drift to younger consumers exaggerated?
- Property losing its gloss – but where is safe?
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- Figure 35: Preferred investment choices, June 2008
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- Figure 36: Investment choices, by gender, age, socio-economic group and marital status, June 2008
- Greater interest in equities among key SIPPs targets
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- Figure 37: Investment choices, by lifestage, Mintel’s Special Groups, working status, household income and housing tenure, June 2008
- Even the Wealthy Achievers and Prosperous Urbanites shun equities
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- Figure 38: Investment choices, by TV region and ACORN group, June 2008
- No instant answers – but some reassurance
The Consumer – Advice and the SIPPs Market
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- Key points
- Attitudes towards SIPPs
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- Figure 39: Attitudes towards SIPPs, June 2008
- Apathy about pensions is still the dominant attitude
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- Figure 40: Key attitudes towards SIPPs, by gender, age and socio-economic group, June 2008
- Lifestage and household income are key determinants of attitudes towards SIPPs
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- Figure 41: Key attitudes towards SIPPs, by lifestage, Mintel’s Special Groups, household income and TV region, June 2008
- A new market being opened up?
- Nurturing the next generation
- SIPPs face strong competition from non-pension saving
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- Figure 42: Selected savings and investment products, by gender, age, socio-economic group and marital status, June 2008
- Implications
- Consolidating holdings in retirement
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- Figure 43: Selected savings and investment products, by lifestage, Mintel’s Special Groups, household income and housing tenure, June 2008
- Consolidation, not accumulation?
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- Figure 44: Selected savings and investment products, by region, ACORN group, technology users and internet usage, June 2008
- Implications
- Pensions matters generally involve a range of advice sources
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- Figure 45: Sources of advice on pensions and investment matters, June 2008
- Use of formal sources of advice increases with age and socio-economic status
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- Figure 46: Sources of advice on pensions and investment matters, by gender, age and socio-economic group, June 2008
- Third age and married consumers most likely to consult widely on pensions
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- Figure 47: Sources of advice on pensions and investment matters, by marital status and lifestage, June 2008
- Peaks in seeking advice relate to more affluent consumers and those in the family group
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- Figure 48: Sources of advice on pensions and investment matters, by lifestage, working status, household income and housing tenure, June 2008
- Wealthy Achievers and consumers in South consult on pensions
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- Figure 49: Sources of advice on pensions and investment matters, by TV region and ACORN group, June 2008
- Web likely to prove a crucial medium for SIPPs
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- Figure 50: Sources of advice on pensions and investment matters, by technology and internet usage, June 2008
- Implications
The Consumer – Further Analysis and Target Groups
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- Key points
- Complete control appeals to a tenth of the population
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- Figure 51: SIPP market target groups, June 2008
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- Figure 52: Attitudes towards SIPPs, by target group, June 2008
- Group One: Trust in the experts
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- Figure 53: Percentage difference to the average for Trust in the experts’ selected defining statements compared with other groups, June 2008
- Who are they?
- Group Two: Simple and Straightforward
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- Figure 54: Percentage difference to the average for Simple and Straightforward’s selected defining statements compared with other groups, June 2008
- Who are they?
- Group Two: Compete control
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- Figure 55: Percentage difference to the average for Complete control’s selected defining statements compared with other groups
- Who are they?
- Group Four: Disinterested
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- Figure 56: Percentage difference to the average for Disinterested selected defining statements compared with other groups
- Who are they?
- Complete control seek the widest source of advice
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- Figure 57: Sources of advice used for investment and/rpenison deicisions, June 2008
Appendix – Target Group Demographics
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- Figure 58: Target group demographics, June 2008
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