Pensions are one of the most important financial products arranged by consumers. However, despite the importance of saving and retirement planning, nearly 40% of pre-retirees have neither a personal nor an occupational pension. If these consumers continue to make no retirement provisions, they will have little choice but to make do with a state pension in retirement. With even the Government admitting that the state pension is too low to provide a comfortable retirement income, the pressure is firmly upon the consumer to take charge in planning for their own retirement. It was with this in mind that the personal pension (PP) was initially introduced in 1988. This report focuses specifically on personal pensions.

The Government affords tax relief on pension contributions at the highest rate of income tax paid by consumers, making a pension one of the most tax-efficient vehicles for retirement saving. Despite the associated tax benefits, some 13 million adults make no retirement provision and countless millions are under-funding their existing arrangements. For pension providers and IFAs, significant opportunities to grow the personal pensions market still exist, although substantial barriers to market expansion are apparent, and these are examined within this report. Shifting the retirement burden on to the consumer

Pension under-funding and the inadequate penetration of second-tier pension provision remains a major concern for the Government. If consumers do not make provisions for their own future, it will be left to the Government to support them. Furthermore, as population demographics change, there will be fewer people of working age to support a state pension and the welfare system, which is funded through taxation. With a pension funding crisis looming, the government is keen to transfer the financial burden of retirement provision on to the consumer.

Increasingly concerned over the pension arrangements of lower-earners, the Government began work on creating a pension product that would place retirement planning within the reach of every consumer. The result was the Stakeholder pension, primarily targeted at those earning between £10,000 and £20,000. The regulations addressed many of the problems associated with traditional pension schemes, including high charges, complex regulations, and minimum contributions that put pensions beyond the reach of many of the less affluent. In assessing the overall market for personal pension provision, this report examines that the impact that the stakeholder pension is having, and is likely to have on the future of second tier retirement provision.

This report examines the market for personal pensions, providing analysis on the overall market size, key players and advertising and promotion. Mintel has also commissioned exclusive consumer research, asking a representative sample of 1,843 consumers questions relating to existing retirement product ownership, their awareness of personal pensions, and their attitudes towards pension provision as a whole.

Other Mintel reports of relevance to this market include:

- Annuities, Finance Intelligence - UK Report, February 2002

- Stakeholder Pensions: Success or Failure?, Finance Intelligence - UK Report, December 2001

- Life Protection, Finance Intelligence - UK Report, November 2001

- Interactive Life & Pensions, Finance Intelligence - UK Report, September 2001

and the forthcoming:

- Premium Pensions, Finance Intelligence - UK Report, May 2002

- The Grey Market, Finance Intelligence - UK Report, June 2002.

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