Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- More pensioners, more pressure on the state pension
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- Figure 1: Expectation of life, principal projection, UK, 1981-2062
- Auto-enrolment continues to increase workplace pension ownership
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- Figure 2: Pension provisions of UK workers, by type of pension, 2010-15
- The consumer
- Pension ownership rises but savings and investments stay largely stable
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- Figure 3: Savings and pension product ownership, October 2016
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- Figure 4: Investment product ownership, October 2016
- Savings accounts and ISAs expected to play a large role in retirement
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- Figure 5: Products expected to be used to fund retirement, October, 2016
- Most workplace pension contributors are paying in the minimum amount
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- Figure 6: Current workplace pension contribution levels, October 2016
- Face-to-face is the preferred channel for professional advice
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- Figure 7: Interest in different channels for receiving retirement advice and guidance, by types of advice and guidance, October 2016
- Two fifths plan to save and invest in the same manner after retiring
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- Figure 8: Post-retirement saving and investing plans, October 2016
- Funding retirement is a concern for many but a priority for few
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- Figure 9: Attitudes towards retirement planning, October 2016
- There is little optimism surrounding retirement
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- Figure 10: Attitudes towards retirement, October 2016
- What we think
Issues and Insights
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- Consumers need a push to improve pension saving habits
- The facts
- The implications
- A more positive message is necessary to boost engagement
- The facts
- The implications
- Online advice is the future, but Baby Boomers need to be shown it is the present too
- The facts
- The implications
The Market – What You Need to Know
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- More pensioners, more pressure on the state pension
- Auto-enrolment continues to increase workplace pension ownership
- The retirement advice market faces more regulatory changes
- Online planning tools target Millennials and Baby Boomers alike
Retirement Planning Environment
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- Longer life expectancies put greater importance on retirement decisions
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- Figure 11: Expectation of life, principal projection, UK, 1981-2062
- More pensioners, a greater burden on the state
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- Figure 12: UK population, by age band, and dependency ratios, 2014-84 (based on 2014 projections)
- The new state pension took effect in 2016
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- Figure 13: Projected dates for full transitions to increase state pension ages, by gender
Retirement Funding Options
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- DC membership continues to grow due to auto-enrolment…
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- Figure 14: Pension provisions of UK workers, by type of pension, 2010-15
- …and attention now turns to increasing contributions
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- Figure 15: Auto-enrolment minimum contribution timetable
- Personal pensions membership slides as a result of auto-enrolment
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- Figure 16: Number of personal pension schemes, excluding SIPPs, in force, 2010-15
- Lifetime ISAs set to launch as an alternative to pensions
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- Figure 17: Number of ISAs and amounts subscribed, segmented by component type, 2011/12-2015/16
- Income drawdown has overtaken annuities
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- Figure 18: Volume and value of new annuities and income drawdown contracts, 2013-16
- Buy-to-let market hit by regulatory changes
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- Figure 19: Number of mortgages for buy-to-let, monthly, November 2013-October 2016
Regulatory and Legislative Changes
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- FAMR looks to make advice more affordable and accessible…
- …but official guidance services are about to change
- Advice allowance: enough to increase take-up?
- Encouraging competition in annuities
- The Government closes pension ‘recycling’ tax loophole
Recent Market Developments
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- Aviva targets Millennials with Shape My Future service…
- …and has returned to the advice market
- Saga launches planning tool for over-50s
- Employer-based advice and guidance enters the market
The Consumer – What You Need to Know
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- Pension ownership rises but savings and investments stay largely stable
- Savings accounts and ISAs expected to play a large role in retirement
- Most workplace pension contributors are paying in the minimum amount
- Face-to-face is the preferred channel for professional advice
- Funding retirement is a concern for many but a priority for few
- There is little optimism surrounding retirement
Savings and Investment Product Ownership
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- Workplace pension ownership rises to 36%
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- Figure 20: Savings and investments product ownership, October 2015 vs October 2016
- Savings and investments ownership stay largely stable
- Pension inequalities persist
Retirement Funding Plans
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- Not all pension holders expect their pension to fund retirement
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- Figure 21: Products expected to be used to fund retirement, October, 2016
- Popularity of Cash ISAs could point to a bright future for Lifetime ISAs
- A third plan to fund their retirement with just one product
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- Figure 22: Repertoire of products expected to be used to fund retirement, October 2016
Workplace Pension Contribution Activity
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- Most workplace pension contributors are paying in the minimum amount
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- Figure 23: Current workplace pension contribution levels, October 2016
- A third of DC pension holders voluntarily pay above the required amount
- Women’s contributions lag behind men
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- Figure 24: Current workplace pension contribution levels, by gender, October 2016
Advice and Guidance Channels
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- Face-to-face is the preferred channel for professional advice…
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- Figure 25: Interest in different channels for receiving retirement advice and guidance, by types of advice and guidance, October 2016
- …but online channels are more popular for guidance services
- Baby Boomers are resistant to online channels services
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- Figure 26: Interest in using online methods to access professional retirement advice and guidance services, by generation, October 2016
Post-retirement Saving and Investing Plans
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- Two fifths plan to save and invest in the same manner after retiring
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- Figure 27: Post-retirement saving and investing plans, October 2016
- People are aware of the length of retirement
- Wealthier savers and investors are more likely to have a post-retirement plan
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- Figure 28: Post-retirement saving and investing plans, October 2016
Attitudes towards Retirement Planning
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- Funding retirement is a major concern…
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- Figure 29: Attitudes towards retirement planning, October 2016
- …but a relatively low priority
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- Figure 30: Current workplace pension contribution levels, by agreement with the statement “Planning for retirement is a priority for me at the moment”, October 2016
- Education about retirement options is essential
Attitudes towards Retirement
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- Is retirement becoming a thing of the past?
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- Figure 31: Attitudes towards retirement, October 2016
- Generation X are the most pessimistic about retirement
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- Figure 32: Agreement with the statements “I think my generation will not have as comfortable a retirement as previous ones”, and “I think my generation will have a more comfortable retirement than future ones”, by generation, October 2016
- The state pension age: no longer the default marker of retirement
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- Figure 33: Agreement with the statement “I plan to retire as soon as I can claim the state pension”, by agreement with the statement “I expect to have a comfortable income in retirement”, October 2016
Appendix – Data Sources, Abbreviations, and Supporting Information
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- Abbreviations
- Consumer research methodology
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