Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Little prospect for growth over the next five years
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- Figure 1: Forecast of new personal and individual stakeholder pension business (regular premiums only) – fan chart, 2007-17
- New single-premium business supported by pension transfers
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- Figure 2: New personal and individual stakeholder pension business – regular and single premiums, 2008-12
- Pension auto-enrolment increases competitive pressures
- Intermediaries dominate distribution
- Market factors
- Economic slowdown deflecting attention from longer-term financial goals
- Recent regulatory developments
- Companies, brands and innovation
- With Aviva at the top, the top five providers control two thirds of the market
- Adspend on pensions boosted by introduction of auto-enrolment in 2012
- Recent product development has been driven by the RDR
- The consumer
- Less than three in five non-retired adults contributing to any type of pension
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- Figure 3: Active pension ownership and retirement savings, December 2012
- Most have retirement savings valued at less than £30,000
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- Figure 4: Value of retirement savings, December 2012
- Simple annual statements and low costs the most important pension features
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- Figure 5: What consumers look for in a personal pension, December 2012
- The internet and IFAs the most common choices for pension advice
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- Figure 6: Sources of pension advice, December 2012
- Consumers have mixed feelings towards retirement and pensions
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- Figure 7: Agreement with statements about saving for retirement and pensions, December 2012
- What we think
Issues in the Market
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- Is the start of pension auto-enrolment a threat or an opportunity?
- As the market evolves where will personal pensions fit in?
- How important is a well-known pension brand to consumers?
- What types of features will future savers look for in a pension?
Trend Application
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- Staying on the right path towards retirement
- Young savers with grown-up attitudes
- Mintel Futures: Generation Next
Market Drivers
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- Key points
- Up and down economy keeps the focus on near-term financial priorities
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- Figure 8: Quarterly changes in GDP* and the savings ratio**, 1998-Q3 2012
- Inflation is easing but average wages are not rising
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- Figure 9: Monthly change in RPI and average weekly earnings, January 2009-December 2012
- Poor annuity rates act as a disincentive to saving in a pension
- Latest regulatory developments
- RDR reforms now in effect
- Pension auto-enrolment raising the profile of pensions
- Flat-rate state pension set to be introduced in 2017
- Maximum value of pension contributions set to be pulled back further
Competitor Products
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- Key points
- Competing pension products
- New occupational DC pension business falls in 2012
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- Figure 10: New insurer-administered DC occupational pension business (volume and value), 2008-12
- Growth in new GPP business continues
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- Figure 11: Number of new individual pension contracts (including GPPs), by type of product, 2008-12
- Wealthy choosing SIPPs over the more basic individual pensions
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- Figure 12: Value of new individual pension business (including GPPs), by premium, 2008-12
- Non-pension alternatives
- 2011/12 tax year ISA contributions stagnate
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- Figure 13: Value of ISA sales, by type of ISA, 2006/07-2011/12
- Figure 14: Volume and value of ISA subscriptions, by type of ISA, 2006/07-2011/12
- Many Britons prefer property to pensions
SWOT Analysis
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- Figure 15: Personal and stakeholder pensions – SWOT analysis, 2013
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Who’s Innovating?
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- Key points
- Pensions evolve with regulatory changes and technological advances
- RDR drives changes in personal and individual stakeholder products
- Aviva and AEGON reorganise and refresh
- RDR pushing some IFAs to start experimenting with ‘digital’ advice
- Pensions Wizard from Wake up your Wealth – ‘Algorithm-based Advice’
- IFA firm Informed Choice set to launch IC Direct
Market Size and Forecast
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- Key points
- Regular-premium business falls sharply in 2012
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- Figure 16: New personal pension and individual stakeholder pension business, 2008-12
- Transfers continue to artificially support new single-premium business
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- Figure 17: Transfers as a share of new personal and individual stakeholder pension business, 2008-12
- Five-year forecast of overall regular premiums
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- Figure 18: Forecast of new personal and individual stakeholder pension business (regular premiums only) – fan chart, 2007-17
- Figure 19: Forecast of new regular-premium personal pension and individual stakeholder pension business, 2007-17
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- Aviva holds on to its top position in the rankings in 2011
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- Figure 20: Ranking of individual pension providers – UK, by GWP relating to total individual pension and income drawdown business, 2010 and 2011
Companies and Products
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- Aviva
- Standard Life
- AEGON UK
- Lloyds Banking Group
- Friends Life
Brand Communication and Promotion
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- Key points
- Introduction of auto-enrolment provides a boost to pension adspend
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- Figure 21: Total advertising expenditure on pension products and services (excluding annuities), 2008-12
- Personal and stakeholder pension advertising rises by two thirds in 2012
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- Figure 22: Total advertising expenditure on pension and retirement income product, by sub-category, 2008-12
- DWP top advertiser of pensions in 2012
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- Figure 23: Top five advertisers of pension products and services, 2010-12
Channels to Market
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- Key points
- Most individual pensions sales are via intermediaries
- IFAs maintain their dominance in personal pension sales
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- Figure 24: New personal pension business, by sales channel, 2008-12
- Direct sales the only channel to see growth in stakeholder business in 2012
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- Figure 25: New individual stakeholder pension business, by sales channel, 2008-12
Active Pension Ownership and Retirement Savings
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- Key points
- Just one in seven regularly contribute to an individual pension
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- Figure 26: Active pension ownership and retirement savings, December 2012
- Auto-enrolment – an opportunity or a threat?
- Incentive to save in a pension is particularly strong for higher earners
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- Figure 27: Active pension ownership and retirement savings, by highest rate of income tax paid, December 2012
- Individual pensions will remain attractive for the self-employed
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- Figure 28: Active pension ownership and retirement savings, by gender and working status, December 2012
- Lack of retirement savings among women points to an opportunity
Value of Retirement Savings
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- Key points
- Retirement savings primarily concentrated at values below £30,000
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- Figure 29: Value of retirement savings, December 2012
- A large proportion of over-45s will have to play catch-up
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- Figure 30: Value of retirement savings, by gender and age, December 2012
- Promoting the peace of mind of getting ahead of the game early on in life
- Pension tax relief makes it easier for higher earners to accumulate funds
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- Figure 31: Value of retirement savings, by highest rate of income tax paid, December 2012
- Individual pension owners most likely to have £30K+ in savings
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- Figure 32: Value of retirement savings, by pension and retirement savings ownership, December 2012
What Consumers Look for in a Personal Pension
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- Key points
- Simplicity and cost efficiency most important to pension savers
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- Figure 33: What consumers look for in a personal pension, December 2012
- Interest in professional management and choice linked to wealth
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- Figure 34: Level of agreement with selected statements on what consumers look for in a personal pension, December 2012
- The importance of a well-known brand tends to diminish over time
- Control over contributions more important than control over investments
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- Figure 35: Level of agreement with selected statements on what consumers look for in a personal pension, December 2012
- A flexible approach attractive for younger people and high earners
- Interest in the ability to manage and monitor pensions online set to grow
Sources of Pension Advice
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- Key points
- The internet and IFAs the most popular choices for pension advice
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- Figure 36: Sources of pension advice, December 2012
- Source of pension advice changes with age
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- Figure 37: Sources of pension advice, by age and gender, December 2012
- Among those who would use just one source, IFAs come out on top
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- Figure 38: Repertoire* on sources of pension advice, December 2012
- For most, independent pension advice is out of reach
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- Figure 39: Sources of pension advice, by value of retirement savings, December 2012
- With auto-enrolment more will go to employers for pension advice
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- Figure 40: Sources of pension advice, by pension ownership and retirement savings, December 2012
Attitudes towards Saving for Retirement
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- Key points
- Fewer than two in five agree that saving for retirement is a priority
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- Figure 41: Level of agreement with statements about saving for retirement, December 2012
- Confidence of a comfortable retirement dwindles with age
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- Figure 42: Level of agreement with statements about saving for retirement, by gender and age, December 2012
- Wealthy are more positive but not overwhelmingly confident either
- Coming of age during a crisis a blessing in disguise
- Helping people to stay on the right path to retirement
- Those who own a pension tend to have more favourable attitudes
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- Figure 43: Level of agreement with statements about saving for retirement, by pension ownership and retirement savings, December 2012
Attitudes towards Saving in a Pension
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- Key points
- Consumers generally show little interest in pensions…
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- Figure 44: Level of agreement with statements about saving in a pension, December 2012
- …but 55% agree that early access would make them more appealing
- Under-35s the most inclined to want to manage their own pensions
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- Figure 45: Level of agreement with statements about saving in a pension, by gender and age, December 2012
- Existing pension owners broadly more positive but this can be improved
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- Figure 46: Level of agreement with statements about saving in a pension, by pension ownership and retirement savings, December 2012
Appendix – Market Forecast
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- Best and worst case scenario forecast
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- Figure 47: Forecast of new personal and individual stakeholder pension business (regular premiums only) Best and worst case scenario, 2012-17
Appendix – Active Pension Ownership and Retirement Savings
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- Figure 48: Active pension ownership and retirement savings, by demographics, December 2012
- Figure 49: Active pension ownership and retirement savings, by demographics, December 2012 (continued)
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- Figure 50: Active pension ownership and retirement savings, by demographics, December 2012 (continued)
- Figure 51: Active pension ownership and retirement savings among non-retired adults, by demographics, December 2012
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- Figure 52: Active pension ownership and retirement savings among non-retired adults, by demographics, December 2012 (continued)
- Figure 53: Active pension ownership and retirement savings among non-retired adults, by demographics, December 2012 (continued)
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- Figure 54: Active pension ownership and retirement savings, by type of pension owned, December 2012
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Appendix – Value of Retirement Savings
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- Figure 55: Value of retirement savings, by demographics, December 2012
- Figure 56: Value of retirement savings, by demographics, December 2012 (continued)
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- Figure 57: Pension ownership and retirement savings, by value of retirement savings, December 2012
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Appendix – What Consumers Look for in a Personal Pension
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- Figure 58: What consumers look for in a pension – easy-to-understand annual statements, by demographics, December 2012
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- Figure 59: What consumers look for in a pension – low fees and charges, by demographics, December 2012
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- Figure 60: What consumers look for in a pension – the ability to vary contribution levels as I please, by demographics, December 2012
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- Figure 61: What consumers look for in a pension – managed by an investment professional, by demographics, December 2012
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- Figure 62: What consumers look for in a pension – access to a wide variety of investment types, by demographics, December 2012
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- Figure 63: What consumers look for in a pension – the ability to make lump-sum contributions, by demographics, December 2012
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- Figure 64: What consumers look for in a pension – the ability to manage how pension is invested, by demographics, December 2012
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- Figure 65: What consumers look for in a pension – the ability to monitor pension online, by demographics, December 2012
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- Figure 66: What consumers look for in a pension – a well-known brand, by demographics, December 2012
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Appendix – Sources of Pension Advice
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- Figure 67: Sources of pension advice, by demographics, December 2012
- Figure 68: Sources of pension advice, by demographics, December 2012 (continued)
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- Figure 69: Repertoire on sources of pension advice, by demographics, December 2012
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Appendix – Attitudes towards Saving for Retirement
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- Figure 70: Agreement with the statements ‘I am happy to lock up some of my savings until retirement’ and ‘Saving for retirement is a priority for me’, by demographics, December 2012
- Figure 71: Agreement with the statement ‘I’m confident I’ll be able to save enough to retire comfortably’, by demographics, December 2012
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Appendix – Attitudes towards Saving in a Pension
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- Figure 72: Agreement with the statements ‘Saving in a pension would be more attractive if I could access the funds under certain circumstances’ and ‘It’s better to manage your own pension savings’, by demographics, December 2012
- Figure 73: Agreement with the statements ‘There are better ways to save for retirement than a pension’ and ‘Arranging my own personal pension is not necessary’, by demographics, December 2012
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- Figure 74: Attitudes towards saving in a pension, by value of retirement savings, December 2012
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