Table of Contents
Executive Summary
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- The market
- Auto-enrolment has reversed the decline in workplace pension ownership…
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- Figure 1: Proportion of employees with workplace pensions, by type of pension, 2005-14
- …but the biggest challenges will come in the smallest packages
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- Figure 2: Auto-enrolment staging volumes forecast, by quarter
- Strong growth in new insurer business is expected to continue into 2020
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- Figure 3: Forecast of total insurer-administered new workplace pension premiums, fan chart, 2015-20
- The market continues to be divided between contract-based and trust-based pensions
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- Figure 4: Pension scheme types declared by employers in compliance with auto-enrolment, as at 31 March 2014
- The consumer
- Pension reforms encourage a greater focus on retirement savings
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- Figure 5: Prioritisation of retirement savings, March 2015 versus April 2014
- 8% of employees unsure if their employer offers a workplace pension
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- Figure 6: Proportion of main employers offering a workplace pension scheme, March 2015
- 84% of employees that have access to a workplace scheme are members
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- Figure 7: Membership of main employer’s workplace pension scheme, March 2015
- 19% of employees admit they don’t know what type of pension they have
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- Figure 8: Pension type, by employer sector, March 2015
- Auto-enrolment awareness stalls as attentions turn to pension freedoms
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- Figure 9: Awareness of workplace pension auto-enrolment
- The media has reached further than employers or pension providers on auto-enrolment
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- Figure 10: Sources of auto-enrolment knowledge, March 2015
- Three quarters value the importance of a good pension in a job offer
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- Figure 11: Influence of workplace pension on job offer selection, March 2015
- Employees expect more support from their employers
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- Figure 12: Attitudes towards employers and financial planning, March 2015
- Uncertainty is holding people back from good at-retirement decisions
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- Figure 13: Attitudes towards retirement and the pension system, March 2015
Issues and Insights
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- The popularity of DC schemes has shifted pension risk from employers to employees
- The facts
- The implications
- The advice gap threatens effective decision making
- The facts
- The implications
- Pension pots under attack as scammers seek to exploit the new freedoms
- The facts
- The implications
The Market – What You Need to Know
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- Workplace pension ownership driven up by auto-enrolment
- Insurers focus on group pensions but trust-based options are catching up
- Auto-enrolment to bring fresh challenges with smallest employers
- Advisers dominate contract-based scheme distribution
Workplace Pension Ownership
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- Auto-enrolment has successfully reversed the decline in pension ownership…
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- Figure 14: Proportion of employees with workplace pensions, by type of pension, 2005-14
- …and the private sector is driving the shift to DC schemes
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- Figure 15: Proportion of employees with workplace pensions, by employer sector and type of pension, 2014
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- Figure 16: Proportion of employees with workplace pensions, by age band and type of pension, 2014
- Women outrank men on workplace pension membership
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- Figure 17: Proportion of employees with workplace pensions, by working pattern and gender, 2014
- Note on Annual Survey of Hours and Earnings data
Insurer-administered Market Size
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- Group schemes are the main market for insurance companies…
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- Figure 18: New insurer-administered group contract-based pension business (volume and value), 2010-14
- …but trust-based scheme membership is stepping up
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- Figure 19: New insurer-administered occupational trust-based pension business (volume and value), 2010-14*
Insurer-administered Market Forecast
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- Strong growth expected on the back of auto-enrolment
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- Figure 20: Forecast of total insurer-administered new workplace pension premiums, fan chart, 2015-20
- Forecast methodology
- Fan chart explanation
Market Drivers
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- The market is split evenly between trust- and contract-based schemes…
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- Figure 21: Number of insurer-administered trust-based scheme members and contract-based pension policies in force, 2009-13
- …and auto-enrolment has reinforced the divide
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- Figure 22: Pension scheme types declared by employers in compliance with auto-enrolment, as at 31 March 2014
- Master trusts have yet to reach their full potential
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- Figure 23: Trust-based scheme types declared by employers in compliance with auto-enrolment, as at 31 March 2014
- Big business has driven uptake but the biggest challenges are yet to come
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- Figure 24: Auto-enrolment staging volumes forecast, by quarter
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- Figure 25: Proportion of employees with workplace pensions, by sector and size of employer, 2014*
- Opt-out rates are running much lower than expected
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- Figure 26: Declaration of compliance, automatic enrolment, 2013-15
- 44% of people are now actively contributing to a workplace pension…
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- Figure 27: Active pension ownership, by scheme type, 2012-14
- …but popular DC schemes draw low contributions
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- Figure 28: Minimum contribution schedule for auto-enrolment schemes
- Figure 29: Proportion of employees with workplace pensions, by banded rate of contribution and pension type, 2014
- Highest number of UK employers in more than a decade
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- Figure 30: Estimated number of employers in the private sector, UK, 2000-14*
- Growing DB liabilities are encouraging employers to derisk
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- Figure 31: In-force bulk buyout/buy-in business, funds under management, 2009-13
- New pension freedoms are influencing the perception of workplace pensions
Channels to Market
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- Most contract-based schemes are sold through advisers…
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- Figure 32: Proportional distribution of total insurer-administered new premium, by pension type and sales channel, 2014
Key Players – What You Need to Know
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- Companies starting to address post-reform gaps
- Risk transfer business attracts greater investment from smaller players
- Reforms attract growing adspend from insurers and advisers
Company Strategies
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- More than just a provider
- Scottish Widows
- Aviva
- Just Retirement
- Innovating to meet pension freedoms could pay dividends
- Aviva
- BlackRock
- Retirement Advantage (MGM Advantage and Stonehaven)
- Out-of-the-box auto-enrolment solutions transition smoothly from medium to small employers
- AE in a Box
Insurer Rankings
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- Aviva puts its clout behind trust-based pensions…
- …and transfer business encourages entry into the contract-based market
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- Figure 33: Insurer-administered pension provider rankings, individual and work-based pensions business, based on total UK gross premiums in 2013
- Figure 34: Insurer-administered pension provider rankings, trust-based pensions business, based on total UK gross premiums in 2013
Brand Communication and Promotion
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- Pension adspend has grown in line with reforms
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- Figure 35: Recorded above-the-line, online display and direct mail advertising expenditure on pensions*, 2010/11-2014/15
- Adspend is highest for TV campaigns, driven by the DWP
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- Figure 36: Proportional distribution of recorded above-the-line, online display and direct mail advertising expenditure on pensions*, by media type, 2012/13-2014/15
- Advisers spend heavily to make the most of high demand
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- Figure 37: Top ten for recorded above-the-line, online display and direct mail advertising expenditure on pensions*, 2012/13-2014-15
- Note on NMR data
The Consumer – What You Need to Know
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- Active pension ownership retains growth but there is still work to be done
- Pension reforms have raised the priority level of retirement savings
- Some people are still not sure if their employer offers a pension
- Most employees join or stay in their employers workplace scheme when offered
- The media is the top source of information on auto-enrolment
- Most employees say a generous pension would help them decide between job offers
- Employers are playing a lesser role in retirement planning than employees would like
- Workers are uncertain about the pension system and the options available to them at retirement
Active Pension Ownership
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- Workplace pensions hold onto early auto-enrolment growth…
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- Figure 38: Active pension ownership, by scheme type, 2012-14
- …but some demographics have been overlooked
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- Figure 39: Active workplace pension ownership, by gross annual household income, December 2014
Prioritisation of Retirement Savings
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- 45% of employees consider retirement savings to be a high priority…
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- Figure 40: Prioritisation of retirement savings, April2014 versus March 2015
- …and older people react strongly to pension reforms
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- Figure 41: Very high or fairly high prioritisation of retirement savings, by age, April2014 versus March 2015
Employers and Pension Schemes Offered
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- 1 in 4 people work for a small private business
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- Figure 42: Main employer sector and size, March 2015
- 1 in 10 aren’t sure if their employer offers a pension scheme
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- Figure 43: Proportion of main employers offering a workplace pension scheme, March 2015
Workplace Pension Scheme Membership
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- Most employees offered a workplace pension, choose to participate
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- Figure 44: Membership of main employer’s workplace pension scheme, March 2015
- Part-time employees twice as likely to shun pensions than full-time employees
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- Figure 45: Proportion of employees that are not a member of their main employer’s workplace pension scheme, by working pattern, March 2015
Type of Workplace Pension
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- A fifth of pension holders don’t know what type of pension they have…
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- Figure 46: Pension type, March 2015
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- Figure 47: Pension type, by employer sector, March 2015
- …and the effect is most pronounced among the lower earners
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- Figure 48: Proportion of employees not sure what kind of pension scheme they are a member of, by gross annual household income, March 2015
Auto-enrolment Awareness
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- Awareness has stalled now the initial buzz has faded…
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- Figure 49: Awareness of workplace pension auto-enrolment, March 2015
- …and the lowest income groups are in the dark
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- Figure 50: No awareness of workplace pension auto-enrolment, by gross annual household income, March 2015
- DWP media campaign drives auto-enrolment awareness…
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- Figure 51: Sources of auto-enrolment knowledge, March 2015
- …and 61% have consulted just one source of auto-enrolment information
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- Figure 52: Repertoire analysis of sources of auto-enrolment knowledge, March 2015
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- Figure 53: Sources of auto-enrolment knowledge, by repertoire analysis, March 2015
The Relative Importance of Workplace Pensions
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- The majority say a generous pension makes a difference…
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- Figure 54: Influence of workplace pension on job offer selection, March 2015
- …but 35-44-year-olds are less responsive
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- Figure 55: Proportion of people that said a more generous workplace pension would make no difference to their job offer selection, by age, March 2015
The Role of Employers in Financial Planning
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- Many workers expect their employers to support them with financial planning…
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- Figure 56: Attitudes towards employers and financial planning, March 2015
- …and 45-54s feel cut adrift just as they approach retirement
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- Figure 57: Agreement with the statement ‘My employer has been really valuable in helping me to make decisions about my financial future’, by age, March 2015
Attitudes towards Retirement and the Pension System
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- Uncertainty and worry over the retirement landscape are rife…
- …while providers need to work on improving trust
- A personal touch can improve engagement
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- Figure 58: Attitudes towards retirement and the pension system, March 2015
Appendix – Market Size and Forecast
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- Figure 59: Best and worst case forecast of total insurer-administered new workplace pension premiums, 2015-20
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