Table of Contents
Executive Summary
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- The market
- Insurer-administered business will continue to rise
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- Figure 1: New insurer-administered occupational pension premiums, 2007-17
- Figure 2: Forecast of new GPP premiums, 2007-17
- Market factors
- Auto-enrolment will bring growth opportunities to the market
- RDR will make adviser charges more transparent
- Recently introduced consultancy charges will be banned
- Companies, products and innovations
- Innovations
- Large pension providers restructure for auto-enrolment
- The consumer
- Consumers have low levels of savings
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- Figure 3: Amount of savings and investments, April 2013
- DB schemes remain the most common form of occupational pension
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- Figure 4: Ownership of financial products, April 2013
- A fifth of consumers work in small businesses
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- Figure 5: Type of employer, April 2013
- Consumers are split as to whether they want employers to help with financial planning
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- Figure 6: Attitudes towards employer’s role in financial planning, April 2013
- Consumers have low levels of engagement with their workplace pensions
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- Figure 7: Attitudes towards managing employer pensions, April 2013
- A fifth of consumers don’t have a company pension because they can’t afford it
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- Figure 8: Reasons for not owning an employer pension, April 2013
- What we think
Issues in the Market
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- Where are the auto-enrolment opportunities for pension providers?
- Will master trusts come to dominate the market?
- How will simplicity be introduced to the workplace pensions market?
- To what extent do consumers engage with occupational pensions?
- Is there consumer demand for employer-led financial services?
Trend Application
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- Increasing awareness to manage consumers retirement expectations
- Bring in the experts
- The next generation of savers
Regulation and Legislation
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- Key points
- The auto-enrolment rollout has begun
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- Figure 9: Amount of auto-enrolment contributions, May 2013
- Impact of auto-enrolment
- Expected take-up and opt-out rates
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- Figure 10: Likelihood of opting out of pension auto-enrolment, July 2012
- Kiwi Saver – a working example of auto-enrolment
- The OFT takes a closer look at the workplace pension market
- The RDR will help to make workplace pensions more transparent
- Ban on consultancy charging imminent
- Single tier pension introduced
- Contracting out
- The Pension Protection Fund
Market Drivers
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- Key points
- The UKs ageing population will put strain on retirement income
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- Figure 11: UK population, by age, 2010-35 (2010-based projections)
- Longer life expectancy means people will have to save more
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- Figure 12: Cohort life expectancy at age 60, by gender, 1981-2059
- Consumers will work for longer
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- Figure 13: Proportion of active members of private sector occupational pension schemes which allow members to work beyond normal pension age, by benefit structure and whether a pension can be drawn while continuing to work, 2011
- Contribution rates remain higher to DB than DC schemes
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- Figure 14: Weighted average contribution rates to private sector occupational pensions schemes, by size and benefit structure and contributor (percentages), 2011
- Pension liabilities set to increase
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- Figure 15: The number of occupational pensions in payment, by sector, 2012
- Three quarters of companies offer some form of pension to their staff
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- Figure 16: Proportion of employers offering benefits to all employees, 2009-13
SWOT Analysis
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- Figure 17: SWOT analysis for occupational pensions market, June 2013
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Who’s Innovating?
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- Key points
- Lack of innovation in the marketplace
- Master (or super) trusts could tackle issue of job mobility
- Workplace ISAs give consumers more flexible savings options
- Alternative assets to back up pension fund liabilities
- Defined ambition and cash balance schemes
Occupational Scheme Membership
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- Key points
- Fewer private companies offer pension benefits
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- Figure 18: Number of active occupational pension scheme members, pensions in payment and preserved entitlements – UK, by sector, 2007-11
- Note on double counting
- Private sector contributions diminishing
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- Figure 19: Number of active private sector occupational scheme members – UK, 1995-2011
- The private sector moves away from DB schemes in favour of DC
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- Figure 20: Number of active members of occupational pension schemes – UK, by status, sector and benefit structure, 2011
- Large companies are the main source of occupational pensions
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- Figure 21: Number of active members of private sector occupational schemes (open and closed) – UK, by size and benefit structure, 2011
- DB schemes look to minimise costs
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- Figure 22: Proportion of active members of private sector DB occupational pension schemes, by changes made to the scheme since April of the previous year, 2009-11
- DC schemes become more accessible, ready for auto-enrolment
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- Figure 23: Proportion of active members of private sector DC occupational pension schemes, by changes made to the scheme since 6 April of previous year, 2009-11
Market Size and Forecast
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- Key points
- Insurer-administered occupational pension market
- New regular-premium contracts declined by 12% in 2012
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- Figure 24: New insurer-administered occupational pension business (volume and value), 2007-12
- Regular premiums fall in preparation for auto-enrolment
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- Figure 25: New insurer-administered occupational pension premiums, by sub-sector, 2007-12
- TIP sales gather momentum
- Employers look to bulk buyouts to reduce their liabilities
- Occupational pension membership declines by 29% in the last five years
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- Figure 26: Insurer-administered occupational pension business in force, 2007-11
- Insurer-administered schemes expected to grow
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- Figure 27: Forecast for new insurer administered occupational pension premiums, 2007-17
- Figure 28: Value sales for new insurer-administered occupational pension premium value, 2007-17
- GPPs
- GPP have grown steadily in over the last five years
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- Figure 29: New GPP business, 2007-12
- New GPP business forecast
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- Figure 30: Forecast of new GPP premiums – Fan chart, 2007-17
- Figure 31: Value of GPP premiums, 2007-17
- Forecast methodology
Provider Ranking and Supply Structure
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- Key points
- Large pension providers restructure in preparation for auto-enrolment
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- Figure 32: Ranking of top 20 providers of insurance-administered occupational pension schemes, by GWP, 2010-11
- Other players in the supply structure of occupational pensions
- Investment management companies
- Pension IFAs
- Benefit consultants
Companies and Products
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- AEGON UK
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- Figure 33: Key financial data for AEGON – UK operations, 2011-12
- Legal & General
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- Figure 34: Key financial data for Legal & General (savings business), 2011-12
- Lloyds Banking Group
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- Figure 35: Key financial data for Lloyds Banking Group (UK business), 2011-12
- Prudential
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- Figure 36: Key financial data for Prudential plc, 2011-12
- Royal London Group/Scottish Life
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- Figure 37: Key financial data for Royal London Group, 2011-12
- Standard Life
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- Figure 38: Key financial data for Standard Life, 2011-12
Brand Communication and Promotion
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- Key points
- Adspend on pension products increases by 73% in 2013
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- Figure 39: Total advertising expenditure on pension products and services, 2009-12
- Soaring adspend is mainly attributed to auto-enrolment
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- Figure 40: Advertising expenditure on pension products and services, by product category, 2009-12
- DWP spends big on advertising
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- Figure 41: Top six advertisers of pension products, 2012
Channels to Market
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- Key points
- Financial advisers increase their role in the regular-premium occupational pension market
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- Figure 42: Distribution breakdown of new insurer-administered occupational pension business – regular premium, 2007-12
- RDR impacts distribution of single premium insurer administered pensions
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- Figure 43: Distribution breakdown of new insurance-administered occupational pension business – single premium, 2007-12
- Financial advisers dominate the GPP market
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- Figure 44: Distribution breakdown of new insurance-administered GPP business – regular premium, 2007-12
- Figure 45: Distribution breakdown of new insurance-administered GPP business – Single premium, 2007-12
Level of Investible Assets
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- Key points
- A quarter of consumers have no savings or investments
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- Figure 46: Level of investible assets, April 2013
- Levels of savings and investments increase with age
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- Figure 47: Amount of savings and investments, by demographics, April 2013
Ownership of Pension Products
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- Key points
- Current levels of occupational pension ownership are low
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- Figure 48: Ownership of saving and investment products, April 2013
- Widespread ownership of cash savings
- DC schemes growing for younger consumers
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- Figure 49: Ownership of financial products, by demographics, April 2013
Types of Employer and Occupational Pension Provision
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- Key points
- Over half of adults employed in the private sector
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- Figure 50: Type of employer, April 2013
- The largest hurdle for auto-enrolment will be small businesses.
- Private sector businesses with fewer than 50 employees are least likely to offer pension benefits
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- Figure 51: Ownership of pension products, by type of employer, April 2013
The Role of Employers in Financial Planning
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- Key points
- Almost half of consumers want more employer interaction with their finances
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- Figure 52: Attitudes towards employer’s role in financial planning, April 2013
- Over a quarter of consumers want more flexible savings products
- Small business employees want less employer interaction compared to the public sector
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- Figure 53: Type of employer, by attitudes towards employer’s role in financial planning, April 2013
- Consumers with no savings or investments do not want help in managing their finances
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- Figure 54: Attitudes towards employer’s role in financial planning, by amount of savings and investments, April 2013
- Consumers with savings up to £49,000 have been neglected and crave advice
- Consumers who want financial involvement are more likely to own workplace pensions
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- Figure 55: Ownership of financial products, by attitudes towards employers role in financial planning, April 2013
Managing Occupational Pensions
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- Key points
- Only a third of consumers know how much their pension is worth
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- Figure 56: Attitudes towards managing employer pensions, April 2013
- Consumers say they don’t rely on their workplace pensions, but they will
- Occupational pensions are underrated
- Consumers who don’t want employer involvement are the ones who need it
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- Figure 57: Attitudes towards managing employer pensions, by attitudes towards employer’s role in financial planning, April 2013
- The move from DB to DC schemes will make for a more engaged workforce
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- Figure 58: Attitudes towards managing employer pensions, by ownership of financial products, April 2013
- Owners of DB pensions value their employer contribution more
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- Figure 59: Attitudes towards managing employer pensions, by ownership of financial products, April 2013
Barriers to Contributing to an Occupational Pension
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- Key points
- Financial pressures restrain pension saving for a fifth of consumers
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- Figure 60: Reasons for not owning an employer pension, April 2013
- Occupational pension ownership will be more universal
- A small proportion put off occupational pension savings due to procrastination
- Small businesses are less likely to offer pension schemes
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- Figure 61: Reasons for not owning an employer pension, April 2013
Appendix – Market Structure
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- Options for workplace pensions
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- Figure 62: Framework for workplace pensions, 2013
- Main parties in the occupational pensions market
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- Figure 63: The main participants in the occupational pensions market, 2013
Appendix – Insurer-administered
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- Total value of regular and single premium insurer-administered policies
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- Figure 64: New insurer administered occupational pension scheme regular premiums, 2007-17
- Figure 65: New insurer administered occupational pension scheme single premiums, 2007-17
Appendix – GPP
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- Total volume of regular and single premium GPP policies
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- Figure 66: Group personal pension business in force, 2007-11
- Total GPP market volume
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- Figure 67: Number of new GPP premiums, 2007-17
- Figure 68: New GPP premiums, 2007-17
- Regular premiums
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- Figure 69: Regular premiums, 2007-17
- Figure 70: Regular premiums, 2007-17
- Single premiums
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- Figure 71: Single premiums, 2007-17
- Figure 72: Single premiums, 2007-17
- Regular premium policies
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- Figure 73: Regular premium policies, 2007-17
- Figure 74: Regular premium policies, 2007-17
- Single premium policies
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- Figure 75: Single premium policies, 2007-17
- Figure 76: Single premium policies, 2007-17
Appendix – Level of Investible Assets
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- Figure 77: Most common amount of savings and investments, by demographics, April 2013
- Figure 78: Next most common amount of savings and investments, by demographics, April 2013
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Appendix – Ownership of Pension Products
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- Figure 79: Ownership of saving, investment and pension products, by demographics, April 2013
- Figure 80: Ownership of saving, investment and pension products, by demographics, April 2013 (continued)
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- Figure 81: Ownership of other saving, investment and pension products, by demographics, April 2013
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Appendix – Types of Employer and Occupational Pension Provision
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- Figure 82: Most common type of employer, by demographics, April 2013
- Figure 83: Next most common type of employer, by demographics, April 2013
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Appendix – The Role of Employers in Financial Planning
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- Figure 84: Most common attitudes towards employers role in financial planning, by demographics, April 2013
- Figure 85: Next most common attitudes towards employers role in financial planning, by demographics, April 2013
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Appendix – Managing Occupational Pensions
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- Figure 86: Most common attitudes towards managing employer pensions, by demographics, April 2013
- Figure 87: Next most common attitudes towards managing employer pensions, by demographics, April 2013
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Appendix – Barriers to Contributing to an Occupational Pension
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- Figure 88: Reasons for not owning an employer pension, by demographics, April 2013
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