Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Fauxthenticity
- Many Mes
Market in Brief
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- Household sector wealth fell sharply to £6.4 trillion in 2009
- Close to a quarter of the population in the prime target market
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- Figure 1: Savings and investment products owned by key alternative retirement savings target group, June 2010
- Alternative retirement savings and investment overview
- Economic conditions remain challenging
- Increasing longevity should motivate people to save more
- Consumer apathy holds back growth in demand
- Tight credit environment holding back property related alternatives
- New government quick to shake up regulatory environment
- Most alternatives sold with advice
- Adspend on alternative retirement products has declined
- Competitive context – pensions market
- Key consumer findings
- Ownership of alternative retirement savings products
- Retirement expectations
- Attitudes towards retirement and retirement planning
Internal Market Environment
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- Key points
- Decline in pension provision needs to be made up via private savings
- Consumer unawareness and apathy hold back the market
- Proposals to bring ISA and pension market closer together
- Consumer resistance to the concept of early access to retirement funds
- CGT rises to 28% for high earners
- Pension tax relief claw back for high earners from April 2011…
- …opening up opportunities for non-pension alternatives
- Official state pension set to progressively rise
- Default retirement age to be abolished
- Further momentum for a phased approach to retirement
- ISA limits to rise in line with RPI
- More people entering retirement with debt
- BTL yields creep back up but obtaining a mortgage still difficult
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- Figure 2: The annual rate of return on BTL (geared investment and cash purchase), Q1 2006-Q4 2009
- Downturn pushes some equity release firms out of the market
Broader Market Environment
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- Key points
- Difficult and slow economic recovery ahead
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- Figure 3: Total GDP, at current prices, 2006-13
- Financial crisis has led to an increased focus on saving (debt repayment)
- Alternative retirement savings products attractive in current environment
- More savings will be required to fund longer lifespans
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- Figure 4: Cohort life expectancy at age 60, by gender, 1981-2056
- More individuals are already working past the official retirement age
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- Figure 5: Breakdown in gross pensioner income (weekly average at 2008-09 prices), 1996-97-2008-09
- Ability to work will be viewed as an asset
- Stock market performance has improved but remains touchy
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- Figure 6: FTSE 100 and FTSE All Share – daily index movements, August 2004-August 2010
- Protecting savings from inflationary pressures and tax hikes
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- Figure 7: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, August 2007-August 2010
- House prices continue to stagnate
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- Figure 8: Average UK house prices, January 2002-June 2009 (monthly data, seasonally adjusted)
Competitive Context – Pensions Market
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- Key points
- Alternative retirement savings products compete with pensions for funds
- Overall contributions into pensions declined by 17% in 2009
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- Figure 9: Total new premiums paid into individual and occupational pensions, 2005-09
- SIPPs a versatile competitor
- Availability and quality of workplace pension provision has deteriorated
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- Figure 10: Size of the defined-contribution pension pool, 1998-2008
- Contributory pension participation will increase with NEST
SWOT Analysis
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- Figure 11: Alternative retirement strategies – SWOT analysis, 2010
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Market Size – Key Alternative Retirement Savings Target Group
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- Key points
- Nearly a quarter of the population are looking for alternatives
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- Figure 12: Savings and investment products owned by key alternative retirement savings target group, June 2010
Market Size – Household Wealth
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- Key points
- Household sector wealth fell 15% to £6.4 trillion in 2009
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- Figure 13: Net worth of the household sector, 2000-09
Alternative Retirement Savings and Investment Overview
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- Key points
- Value of ISA contributions rises by 12% in 2009/10
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- Figure 14: Value of ISA sales, by type of ISA, 2004/05-2009/10
- Some similarities between ISAs and pensions
- New retail collective investment fund sales rise sharply in 2009
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- Figure 15: Retail sales of unit trusts and OEICs – UK-domiciled, 2005-09
- Investment bond new premiums nearly halve in 2009
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- Figure 16: Total number of new single-premium investment bond contracts and value of total new premiums, 2005-09
- Property based alternatives
- Buy-to-let gross advances down by over two thirds in 2009
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- Figure 17: New buy-to-let mortgage business, 2003-09
- Equity release sales have levelled off, but potential remains
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- Figure 18: Total value of equity release sales by SHIP members, 1999-2009
Brand Communication and Promotion
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- Key points
- Adspend on most pension alternatives has declined in 2010
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- Figure 19: Retirement planning-related advertising expenditure, by sub-category, 2008-10
- Diverse group of financial firms advertising in the market
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- Figure 20: Retirement planning-related advertising expenditure, top 20 companies, 2008-10
- 60% of advertising done through specialist press
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- Figure 21: Retirement planning-related advertising expenditure, by media type, 2008-10
Channels to Market
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- Key points
- Most alternative retirement savings products sold via intermediaries
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- Figure 22: Trends for main sources of financial advice used, 2009 and 2010
- Fund supermarkets enable self-management by retail investors
Consumer Ownership of Alternative Retirement Savings Products
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- Key points
- Overall product ownership highest among pension owners
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- Figure 23: Savings and investment products owned, June 2010
- Alternative retirement savings likely just one element of a wider strategy
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- Figure 24: Cross-analysis of select financial products owned, June 2010
- The role of one’s main property in a retirement strategy
- A quarter of non-retired adults own only one savings or investment product
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- Figure 25: Repertoire of savings and investment products owned, June 2010
- People who own only one or two products unlikely to invest in non-pension alternatives
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- Figure 26: Savings and investment products owned, by repertoire of savings and investment products owned, June 2010
- Alternative retirement savings ownership doubles after age 35
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- Figure 27: Ownership of non-pension based savings and investment products, by gender, age and lifestage, June 2010
- Wealthy driving the alternative retirement savings market
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- Figure 28: Ownership of non-pension based savings and investment products, by socio-economic status, working status, gross annual household income, housing tenure and newspaper readership, June 2010
Consumer Attitudes towards Retirement and Retirement Planning
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- Key points
- Close to a fifth say there are better ways to save for retirement than a pension
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- Figure 29: Attitudes towards retirement planning, June 2010
- More could start to realise that saving in a pension alone is not enough
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- Figure 30: Attitudes towards retirement planning, by ownership of select savings and investment products, June 2010
- Those closest to retirement age facing up to retirement reality
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- Figure 31: Attitudes towards retirement planning, by gender and age, June 2010
- Affluent express doubts over pensions and most open to alternatives
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- Figure 32: Attitudes towards retirement planning, by socio-economic group, June 2010
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- Figure 33: Attitudes towards retirement planning, by gross annual household income, June 2010
Consumer Retirement Expectations
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- Key points
- Owners of pension alternatives more confident of retirement prospects
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- Figure 34: Confidence that personal savings will provide a comfortable retirement, June 2010
- Confidence in retirement prospects positively linked with number of products owned
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- Figure 35: Confidence that personal savings will provide a comfortable retirement, by repertoire of savings and investment products owned, June 2010
- Many leaving retirement savings too late
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- Figure 36: Confidence that personal savings will provide a comfortable retirement, by gender, age, lifestage, marital status and region, June 2010
- Confidence rises with affluence and outright homeownership
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- Figure 37: Confidence that personal savings will provide a comfortable retirement, by socio-economic group, working status, household income and tenure, June 2010
- Media usage and confidence in retirement savings
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- Figure 38: Confidence that personal savings will provide a comfortable retirement, by media usage, June 2010
- Years to retirement
- Two fifths of those 10-20 years from retirement own pension alternatives
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- Figure 39: Savings and investment products owned, by years till retirement/scaling back working hours, June 2010
- Many still expect to retire at around the state pension age
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- Figure 40: Years until retirement or the scaling back of working hours, by age, June 2010
- Early retirement will continue to be an aspiration
- Phased retirement likely to become more commonplace
Further Consumer Analysis – Targeting Opportunities
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- Key points
- Key target groups
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- Figure 41: Key alternative retirment savings target groups, June 2010
- Carefree
- My Property
- Open to alternatives
- Target groups and ownership of pensions and pension alternatives
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- Figure 42: Ownership of select savings and investment products, by target groups, June 2010
- My Property group most confident of a comfortable retirement
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- Figure 43: Confidence that personal savings will provide a comfortable retirement, by target groups, June 2010
- Over half in the My Property group 20+ years away from retiring
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- Figure 44: Years till retirement/scaling back working hours, by target groups, June 2010
- Target groups and desired features of retirement savings products
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- Figure 45: Most important features of retirement saving products, by target groups, June 2010
Appendix – Broader Market Environment
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- Figure 46: Total PDI, consumer expenditure and savings, at current and constant 2010 prices, 2006-13
- Figure 47: Projected size of the UK population, by age band, 2010-58
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- Figure 48: UK economic activity, by gender and age, 2005-15
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Appendix – Competitive Context – Pensions Market
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- Figure 49: New individual pension premiums, by product type, 2005-09
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Appendix – Market Size: Alternative Retirement Savings and Investment Overview
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- Figure 50: Number of ISA accounts and amounts subscribed, segmented by type, 1999/2000-2009/10
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Appendix – Channels to Market
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- Figure 51: Gross retail sales of unit trust and OEIC ISAs, by distribution channel, 2005-09
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Appendix – Consumer Ownership of Alternative Retirement Savings Products
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- Figure 52: Ownership of select long-term savings and investment products, by demographics, June 2010
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Appendix – Consumer Attitudes towards Retirement and Retirement Planning
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- Figure 53: Attitudes towards retirement planning, by demographics, June 2010
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- Figure 54: Attitudes towards retirement planning, by demographics (continued), June 2010
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Appendix – Further Consumer Analysis – Targeting Opportunities
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- Figure 55: Attitudes towards retirement planning, by target groups, June 2010
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- Figure 56: Target groups, by demographics, June 2010
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- Figure 57: Repertoire of savings and investment products owned, by demographics, June 2010
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- Figure 58: Most important features of retirement saving products, by demographics, June 2010
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- Figure 59: Next most important features of retirement saving products, by demographics, June 2010
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- Figure 60: Other important features of retirement saving products, by demographics, June 2010
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