Table of Contents
Overview
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- What you need to know
- Products covered in this report
Executive Summary
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- The market
- Regular-premium business continues to decline…
- …while single-premium business is boosted by greater transfer activity…
- …which will continue to drive overall market growth
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- Figure 1: Forecast of new individual personal and stakeholder pension business – Fan chart, 2011-21
- Larger proportion of direct sales in the smaller stakeholder market
- Workplace auto-enrolment indirectly benefits the individual sector
- Cap on exit fees and a new allowance for pension advice introduced
- Companies and brands
- Market experiences further consolidation
- Aviva’s acquisition of Friends Life makes it a market leader of contract-based pensions
- Prototype of Pensions Dashboard near completion
- Using the power of digital technology to educate and inform…
- …and to engage a younger audience
- The consumer
- Auto-enrolment boosts pension participation, but there are still significant gaps
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- Figure 2: Private pension ownership, by total sample and those in work, February 2017
- 64% of individual pension holders are making regular contributions
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- Figure 3: Proportion of individual pension holders who are making contributions, by pension type, February 2017
- The under-45s are the most active contributors
- IFAs are the preferred choice for pensions advice
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- Figure 4: Sources of pension advice most likely to use for each activity, February 2017
- Only 63% of individual pension holders know much how they are paying in charges
- A much higher proportion are open to switching funds than have actually done so over the past five years
- Opportunities for future growth
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- Figure 5: Intentions to open a (new) personal/stakeholder pension or SIPP, February 2017
- 52% of 18-40-year-olds are interested in saving for retirement in a LISA
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- Figure 6: Agreement with statements about LISAs, February 2017
- What we think
Issues and Insights
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- Scope to target those wishing to save for children
- The facts
- The implications
- The self-employed are an underpenetrated market
- The facts
- The implications
- New Lifetime ISA could pose a threat as a competitor product
- The facts
- The implications
The Market – What You Need to Know
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- Volume sales of new regular-premium personal and stakeholder pensions continue to fall
- Growth in single-premium business underpinned by greater transfer activity
- Larger proportion of direct sales in the smaller stakeholder market
- Workplace auto-enrolment indirectly benefits the individual sector
- Cap on exit fees comes into force
Market Size and Forecast
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- Individual personal and stakeholder pensions attract very little virgin business…
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- Figure 7: New individual personal and stakeholder pension business, 2011-16
- …but new pension freedoms have boosted transfer activity
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- Figure 8: Transfers as a share of new individual personal and stakeholder pension business, 2011-16
- The average regular premium has risen over the past two years…
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- Figure 9: Average new individual personal and stakeholder pension regular premiums – new policies only, 2014-16
- ...as has the average personal pension transfer premium
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- Figure 10: Average new individual pension single premium, by type, 2014-16
- Market forecast: transfer business will continue to drive growth
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- Figure 11: Forecast of new individual personal and stakeholder pension business – fan chart, 2011-21
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- Figure 12: Forecast of new individual personal and stakeholder pension business, 2011-21
- Forecast methodology
Channels to Market
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- IFAs dominate the sale of personal pensions
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- Figure 13: New individual personal pension business, by sales channel, 2013-16
- Distribution mix differs in the smaller stakeholder pension market
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- Figure 14: New individual stakeholder pension business, by sales channel, 2012-16
- Intermediary definitions
Market Drivers
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- The number of in-force individual pensions continues to fall…
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- Figure 15: Number of individual and group pensions in-force and number of occupational DC members, 2003-15
- …while the workplace pension sector sees strong growth as a result of auto-enrolment
- SIPPs represent the main growth area…
- …but there is crossover between streamlined SIPPs and DIY personal pensions
- Low-interest rates and rising share prices favour investment
Regulatory and Legislative Changes
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- New pension freedoms boost attractiveness of pension saving
- 1% charge cap on early exit fees comes into force
- Treasury introduces ‘multiple uses’ pension advice allowance
Companies and Brands – What You Need to Know
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- Market experiences growing consolidation
- Aviva’s acquisition of Friends Life
- Development of a Pensions Dashboard is underway
- Pension providers harness digital technology
- Limited above-the-line adspend
Provider Rankings and Market Share
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- Aviva moves into first place following acquisition of Friends Life
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- Figure 16: Rankings of top 10 providers of insurance-administered individual and group contract-based pension business, by gross premiums, 2015
Market Developments and Innovation
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- Consolidation activity
- Aviva bolsters its position by joining forces with a key competitor
- Aegon acquires Cofunds as it looks to become a platform business
- Digital activity and new product launches
- Helping pension savers understand their choices at retirement
- Scottish Widows is working on improving its digital capability
- Prototype of a Pensions Dashboard due to be unveiled imminently
- Prudential launches flexible personal pension
Advertising and Marketing Activity
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- Pension providers spend very little on above-the-line advertising
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- Figure 17: Total above-the line, online display and direct mail advertising expenditure on pension products and advice, 2011/12-2015/16
- Aviva’s digital campaign
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Only 45% of the self-employed have a private pension
- 64% of individual pension holders are making regular contributions
- IFAs are the preferred choice for pensions advice
- Only 63% of individual pension holders know how much they are paying in charges
- Opportunities for future growth
- 52% of 18-40-year-olds are interested in saving for retirement in a LISA
Pension Ownership
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- Around a third of UK adults still have no pension savings…
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- Figure 18: Private pension ownership, by total sample and selected demographic groups, February 2017
- …with ownership lowest among non-workers
- 10% of adults don’t know if they have an individual or group pension
- Many people have multiple pension pots
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- Figure 19: Cross-analysis of private pension ownership, by type of pension, February 2017
Pension Contribution Activity
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- 69% of individual pension holders are making contributions
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- Figure 20: Proportion of individual pension holders who are making contributions, by pension type, February 2017
- The under-45s are the most active contributors
Sources of Pension Advice
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- IFAs seen as main source of advice for personal pensions
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- Figure 21: Sources of pension advice most likely to use for each activity, February 2017
- Over-45s prefer to speak to an adviser in person or over the phone
Pension Engagement and Switching Activity
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- 73% of individual pension savers read their annual benefit statement
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- Figure 22: Agreement with statements about pension understanding, switching activity, satisfaction with performance and alternative savings, February 2017
- Individual pension providers have to be proactive
- Individual pension providers are not required to annually disclose all charges to customers
- 59% of individual pension holders have online access
- 60% are pleased with how their pension is performing
- 60% are open to switching funds
Future Consideration of Personal Pensions
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- Good scope to attract new customers
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- Figure 23: Intentions to open a (new) personal/stakeholder pension or SIPP, by total sample and existing pension holders, February 2017
- 9% of adults would consider opening a personal pension for someone else
Interest in LISAs among Target Age Group
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- Around half of under-40s would be interested in opening a LISA to save for their retirement
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- Figure 24: Agreement with statements about LISAs, February 2017
- Putting the threat into context
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- Figure 25: Agreement with (selected) statements about LISAs, by existing pension holders, February 2017
Appendix – Market Size and Forecast
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- Total market forecast – Best- and worst-case scenarios
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- Figure 26: Forecast of individual personal and stakeholder pension premiums – best- and worst-case scenarios, 2016-21
- Regular-premium sector
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- Figure 27: Forecast of new regular-premium individual personal and stakeholder pension business – fan chart, 2011-21
- Figure 28: Forecast of individual personal and stakeholder pension regular premiums – best- and worst-case scenarios, 2016-21
- Single-premium sector
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- Figure 29: Forecast of new single-premium individual personal and stakeholder pension business – fan chart, 2011-21
- Figure 30: Forecast of individual personal and stakeholder pension single premiums – Best- and worst-case scenarios, 2016-21
- Forecast Methodology
Appendix – Data Sources and Abbreviations
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- Abbreviations
- Consumer research methodology
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