Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
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- Figure 1: Forecast of new individual personal pension and stakeholder pension APE* premiums combined, 2005-15
- Transfer business still highly influential
- Individual stakeholder sales split evenly between IFAs and tied agents
- Market factors
- Economic uncertainty deterring long-term savings activity
- Some longer-term trends more favourable than others
- Internal market environment
- Significant regulatory developments
- Companies, brands and innovation
- Led by Lloyds market share highly concentrated at the top
- General pension advertising rose strongly in 2010
- Competitive context
- The consumer
- Consumer pension ownership
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- Figure 2: Ownership of saving and investment products, by age, January 2011
- Consumer attitudes towards pensions
- Consumer awareness and behaviour
- Consumer pension saving patterns
- Confidence in retirement prospects
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- Figure 3: Confidence that personal savings will provide a comfortable retirement, January 2011
- What we think?
Issues in the Market
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- What is holding the personal and individual stakeholder markets back?
- What kind of impact will the launch of NEST have on the market?
- What do consumers think about saving in a pension?
- How can providers encourage more young people to save in a pension?
- Is the target market likely to be wowed by investment choice?
Future Opportunities
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- Pension provider knows best
- What to expect from your pension: There’s a pension app for that
Internal Market Environment
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- Key points
- Decline in workplace pension benefits widening the savings gap
- Market weighed down by apathy, confusion and unawareness
- Launch of NEST could hurt new business prospects…
- …but there will still be a need for independent pension arrangements
- Regulatory and legislative development
- Major changes in pension legislation from April 2011
- Annuity purchase will become an option not an obligation
- The end of mandatory retirement
- Reduction in pension contribution tax relief for high earners
- State pension age to rise to 66 by 2020
- Allowing early access to pension funds under consideration
Broader Market Environment
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- Key points
- Economic uncertainty prompts financial prudence…
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- Figure 4: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
- …but saving will be challenging for many in 2011
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- Figure 5: Monthly change in RPI and average weekly earnings, 2005-10
- Increasing longevity makes saving for retirement even more important
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- Figure 6: Cohort life expectancy at age 60, by gender, 1981-2058
- Implications of improving longevity need to be made clear
- Stockmarket performance has improved but remains highly volatile
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- Figure 7: FTSE 100 and FTSE All Share – daily index movements, December 2004-December 2010
- Decline in annuity rates makes saving in a pension less attractive
Competitive Context
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- Key points
- Workplace-based pension schemes compete directly with individual schemes
- The number of occupational pensions fell by nearly a fifth in 2009
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- Figure 8: Number of private sector occupational pension schemes in the UK, by scheme size, 2005-09
- Personal and stakeholder pensions may not benefit from decline
- GPPs and company stakeholder pensions
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- Figure 9: New individual pension premiums, GPPs and company-sponsored stakeholder pensions, 2005-10
- Non-pension alternatives
- ISAs the key competing product
- 12% rise in ISA contributions in 2009/10
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- Figure 10: Value of ISA sales, by type of ISA, 2004/05-2009/10
- Property
SWOT Analysis
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- Figure 11: Market for personal and stakeholder pensions – SWOT analysis, 2011
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Who’s Innovating?
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- Key points
- Several companies add funds to fill gap in the market
- Aviva
- Zurich UK Life
- AXA Wealth launches third-way pension products
- Marketing and engaging with customers
- Aviva launches pension planning iPhone app
- Standard Life launches Pension Planner alongside online pension application
- Scottish Widows sponsors London 2012
Market Size and Forecast
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- Key points
- New business levels continue to decline in 2010
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- Figure 12: New individual personal pension and stakeholder pension premiums, 2005-10
- The introduction of NEST will hurt growth prospects
- Stakeholder products could be on their way out
- Transfers continue to represent a high proportion of new business
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- Figure 13: Single-premium transfer business, individual personal pensions and stakeholder pensions, 2006-10
- Total number of policies and regular premiums in force
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- Figure 14: Total number of policies and regular premiums in force, individual personal pensions and stakeholder pensions, 2005-09
- Forecast
- An uncertain future
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- Figure 15: Forecast of new individual personal pension and stakeholder pension APE* premiums combined, 2005-15
- Forecast methodology
Market Share
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- Key points
- Led by Lloyds Banking Group the top five increase their grip on the market
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- Figure 16: Ranking of individual pension providers, based on UK gross written premium, 2008 and 2009
- Less than 3% of all new business generated by those outside the top 20
Companies and Products
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- Key players
- Aviva
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- Figure 17: Present value of new business premiums, 2008-09 and H1 2009-H1 2010
- Lloyds TSB
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- Figure 18: Present value of new business premiums, 2008-09 and H1 2009-H1 2010
- Legal & General
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- Figure 19: New business premiums (APE), 2008-09 and H1 2009-H1 2010
- AXA
- AEGON
Brand Communication and Promotion
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- Key points
- Pensions advertising expenditure up by three fifths in 2010
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- Figure 20: Pensions advertising expenditure, by sub-category, 2008-10*
- Aviva and Scottish Widows responsible for nearly half of all adspend
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- Figure 21: Advertising expenditure by the top ten pensions advertisers, 2009 and 2010*
- Press the main type of advertising media type used
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- Figure 22: Overview of media type used to advertise pensions-related products, 2010*
- Note about NMR data
Channels to Market
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- Key points
- Majority of new pensions generated by intermediaries
- Personal pensions
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- Figure 23: Proportional distribution of new APE* premiums into personal pensions, by distribution channel, 2005-10
- Individual stakeholder pensions
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- Figure 24: Proportional distribution of new APE* premiums into individual stakeholder pensions, by distribution channel, 2005-10
Consumer Pension Ownership
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- Key points
- One in eight report owning a personal or stakeholder pension
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- Figure 25: Ownership of saving and investment products, January 2011
- Shifting existing savings into a pension
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- Figure 26: Cross-analysis of ownership of saving and investment products, January 2011
- Personal pension ownership peaks after 45 years of age
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- Figure 27: Ownership of saving and investment products, by age, January 2011
- Highlighting the long-term benefits of pension tax relief
- Personal pension ownership among low to middle income earners
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- Figure 28: Ownership of saving and investment products, by socio-economic group, January 2011
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- Figure 29: Ownership of saving and investment products, by gross annual household income, January 2011
Consumer Attitudes Towards Pensions
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- Key points
- Half agree that pensions are the best way to save for retirement
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- Figure 30: Attitudes towards pensions, January 2011
- Nearly a third admit they do not know how pensions work
- When it comes to choice of investment – Keep, keeping it simple
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- Figure 31: Agreement with attitudes towards pensions, by ownership of saving and investment products, January 2011
- Younger consumers have more positive views of pensions
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- Figure 32: Agreement with attitudes towards pensions, by gender and age, January 2011
- Positive sentiment most likely to be displayed by the affluent
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- Figure 33: Agreement with attitudes towards pensions, by socio-economic group, January 2011
- Figure 34: Agreement with attitudes towards pensions, by gross annual household income, January 2011
Consumer Awareness and Behaviour
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- Key points
- Many are unaware of how much they should be saving in a pension
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- Figure 35: Pension saving behaviour, January 2011
- Two in five say they are regularly monitoring their pension
- The influence of gender and age
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- Figure 36: Agreement with statements on pension saving behaviour, by gender, age and marital status, January 2011
- Level of engagement among younger consumers is promising
- Income more indicative of engagement than socio-economic status
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- Figure 37: Agreement with statements on pension saving behaviour, by socio-economic group and gross annual household income, January 2011
- Internet users display an above-average level of engagement
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- Figure 38: Agreement with statements on pension saving behaviour, by media usage, January 2011
Pension Saving Levels
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- Key points
- Majority contributing between £50 and £200 a month
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- Figure 39: The value of monthly pension contributions, by type of pension, January 2011
- Active engagement leads to higher contribution levels
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- Figure 40: The value of monthly pension contributions, by agreement with statements on pension saving behaviour, January 2011
- Technological innovation is already helping to improve engagement
- More than two fifths of 18-34-year-olds paying in at least £100 per month
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- Figure 41: The value of monthly pension contributions, by demographics, January 2011
- An opportunity to get more younger people saving in pensions
- Over a third or high earners contributing in excess of £200 a month
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- Figure 42: The value of monthly pension contributions, by demographics, January 2011
Confidence in Retirement Prospects
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- Key points
- Two in five personal pension owners positive about retirement prospects
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- Figure 43: Confidence that personal savings will provide a comfortable retirement, January 2011
- Owners of workplace-based schemes tend to be more confident…
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- Figure 44: Confidence that personal savings will provide a comfortable retirement, by ownership of select saving and investment products, January 2011
- …but this could change as quality of schemes declines
- Indication a minority may have unrealistic expectations
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- Figure 45: The value of monthly pension contributions, by confidence that personal savings will provide a comfortable retirement, January 2011
- Savers need more firm guidance about how much they should be saving
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- Figure 46: Confidence that personal savings will provide a comfortable retirement, by agreement with statements about pension saving behaviour, January 2011
- Nearly half of those aged between 35 and 54 not at all confident
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- Figure 47: Confidence that personal savings will provide a comfortable retirement, by demographics, January 2011
- Savings habit needs to be engrained at an early age
- Confidence rises in line with affluence
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- Figure 48: Confidence that personal savings will provide a comfortable retirement, by demographics, January 2011
- Media and technology usage reflective of financial savvy
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- Figure 49: Confidence that personal savings will provide a comfortable retirement, by media usage, January 2011
Consumer Targeting Opportunities
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- Key points
- Key target groups
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- Figure 50: Key pension target groups, January 2011
- Pension positive
- Demographic highlights
- Pension unschooled
- Demographic highlights
- Pension hesitant
- Demographic highlights
- Pensions part of the mix
- Demographic highlights
- Product ownership levels in line with target group attitudes
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- Figure 51: Ownership of saving and investment products, by target groups, January 2011
- Target groups and confidence in retirement prospects
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- Figure 52: Confidence that personal savings will provide a comfortable retirement, by target groups, January 2011
Appendix – Market Size
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- Figure 53: Forecast of new individual personal pension and stakeholder pension APE* premiums combined, 2005-15
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Appendix – Consumer Pension Ownership
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- Figure 54: Ownership of saving and investment products, by age, January 2011
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Appendix – Consumer Attitudes Towards Pensions
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- Figure 55: Disagreement with attitudes towards pensions, by ownership of saving and investment products, January 2011
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Appendix – Consumer Awareness and Behaviour
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- Figure 56: Agreement with statements on pension saving behaviour, by type of pension, January 2011
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- Figure 57: Disagreement with statements on pension saving behaviour, by type of pension, January 2011
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- Figure 58: Agreement with pension saving behaviour, by demographics, January 2011
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- Figure 59: Disagreement with pension saving behaviour, by demographics, January 2011
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Appendix – Consumer Pension Saving Patterns
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- Figure 60: Value of monthly pension contributions, by agreement with statements on pension saving behaviour, January 2011
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- Figure 61: Value of monthly pension contributions, by disagreement with statements on pension saving behaviour, January 2011
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- Figure 62: Value of monthly pension contributions, by demographics, January 2011
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Appendix – Confidence in Retirement Prospects
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- Figure 63: Confidence that personal savings will provide a comfortable retirement, January 2011
- Figure 64: Confidence that personal savings will provide a comfortable retirement, by demographics, January 2011
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Appendix – Consumer Targeting Opportunities
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- Figure 65: Agreement with attitudes towards pensions, by target groups, January 2011
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- Figure 66: Disagreement with attitudes towards pensions, by target groups, January 2011
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- Figure 67: Agreement and disagreement with statements on pension saving behaviour, by target groups, January 2011
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- Figure 68: Value of monthly pension contributions, by target groups, January 2011
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- Figure 69: Key pension target groups, by demographics, January 2011
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