Table of Contents
Overview
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- What you need to know
Executive Summary
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- The market
- The length of the average retirement is growing
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- Figure 1: Expectation of life for those aged 65 in each year, period principal projection, UK, 1981-2064
- Auto-enrolment has boosted workplace pension ownership
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- Figure 2: Proportion of employees with workplace pensions, by pension type, 1997-2016
- The consumer
- Almost two thirds have at least one pension product
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- Figure 3: Pension product ownership, October 2017
- More than half have financial products other than pensions for retirement
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- Figure 4: Other savings and investment products held for retirement, by age, October 2017
- Friends and family top the list of most likely sources
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- Figure 5: Most likely advice and guidance sources, October 2017
- A quarter expect to increase contributions as they age
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- Figure 6: Outlook for retirement savings contributions, October 2017
- Less than a third expect their standard of living to decline in retirement
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- Figure 7: Outlook for standard of living in retirement, October 2017
- Non-retirees show frustration at moving state pension goalposts
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- Figure 8: Attitudes towards retirement and retirement planning, October 2017
- What we think
Issues and Insights
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- Working later in life is becoming an accepted norm, particularly for women
- The facts
- The implications
- Relying on friends and family in retirement may undermine other planning
- The facts
- The implications
The Market – What You Need to Know
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- The length of the average retirement is growing
- Auto-enrolment has boosted workplace pension ownership
- FCA and the government focus on improving support
Retirement Planning Environment
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- The length of the average retirement is growing
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- Figure 9: Expectation of life for those aged 65 in each year, period principal projection, UK, 1981-2064
- Longer life expectancy means a greater dependence on state support
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- Figure 10: UK population, by age band, and dependency ratios, 2016-86 (based on 2016 projections)
- The rate of increase in the state pension age has been accelerated
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- Figure 11: Projected dates for full transitions to increase state pension ages, by gender
Retirement Funding Options
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- Auto-enrolment has boosted workplace pension ownership
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- Figure 12: Proportion of employees with workplace pensions, by pension type, 1997-2016
- Millennials to bear the brunt of the drop-off in DB schemes
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- Figure 13: Proportion of employees with workplace pensions by age band and type of pension, 2016
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- Figure 14: Proportion of employee jobs with workplace pensions, by type of pension, 2016
- Fewer personal pensions are being arranged
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- Figure 15: Number of new individual personal and stakeholder pensions, 2011-16
- Lifetime ISA reframes ISAs as retirement savings vehicles
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- Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2010/11-2016/17
- Annuity sales have been outpaced by income drawdown
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- Figure 17: Volume of new annuity and income drawdown sales, 2012-16
- One in ten people aged 65+ are still working
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- Figure 18: Employment rate among people aged 65+, Q1 2010-Q3 2017
- Buy-to-let regulation could discourage retirement planning linked to property
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- Figure 19: New buy-to-let mortgages, by purpose of loan, not seasonally adjusted, 2011-16*
Regulatory and Legislative Changes
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- Pensions Dashboard prototype goes live
- Three advisory firms due to merge into one
- New rules mean annuity providers must encourage shopping around
The Consumer – What You Need to Know
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- Almost two thirds have at least one pension product
- More than half have financial products other than pensions for retirement
- Friends and family top the list of most likely sources of information
- A quarter expect to increase contributions as they age
- Less than a third expect their standard of living to decline in retirement
- Non-retirees show frustration at moving state pension goalposts
Pension Product Ownership
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- Almost two thirds have at least one pension product
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- Figure 20: Pension product ownership, October 2017
- Younger Millennials lag behind on workplace pension ownership
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- Figure 21: Pension product ownership, by generation, October 2017
- Pension ownership falls among lower earners
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- Figure 22: Pension product ownership, by gross annual household income, October 2017
Other Products and Plans for Retirement
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- More than half plan to use non-pension savings and investments to fund retirement
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- Figure 23: Other savings and investment products held for retirement, October 2017
- 25-34s are at risk of poor returns on cash savings
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- Figure 24: Other savings and investment products held for retirement, by age, October 2017
- A third of non-retired people plan to fund retirement through an earned income…
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- Figure 25: Other retirement funding plans, October 2017
- … rising to 46% of non-retired females aged 55+
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- Figure 26: Other retirement funding plans, by age and gender, October 2017
- Half of non-retired people focus on 1-3 alternative products and plans
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- Figure 27: Number of other savings/investment products and retirement funding plans, combined repertoire, October 2017
Most Likely Advice and Guidance Sources
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- Friends and family top the list of most likely sources
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- Figure 28: Most likely advice and guidance sources, October 2017
- Personal pension holders more likely to take formal advice
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- Figure 29: Most likely advice and guidance sources, by pension product ownership, October 2017
- Younger people recognise they will need support
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- Figure 30: Use of any advice source, October 2017
Outlook for Retirement Savings Contributions
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- A quarter expect to increase contributions as they age
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- Figure 31: Outlook for retirement savings contributions, October 2017
- Good intentions to increase contributions weaken as people age
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- Figure 32: Outlook for retirement savings contributions, October 2017
- People with alternative retirement funding plans are still more likely to say savings will increase
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- Figure 33: Outlook for retirement savings contributions, by other retirement funding plans, October 2017
Outlook for Standard of Living in Retirement
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- Less than a third expect their standard of living to decline in retirement
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- Figure 34: Outlook for standard of living in retirement, by outlook for retirement savings contributions, October 2017
- Younger people are more optimistic about an improvement in their standard of living
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- Figure 35: Outlook for standard of living in retirement, October 2017
Attitudes towards Retirement and Retirement Planning
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- Non-retirees show frustration at moving state pension goalposts
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- Figure 36: Attitudes towards retirement and retirement planning, October 2017
- Scammers are undermining confidence in retirement planning
- Just a quarter have made plans for future care needs
- People are facing up to the reality of a ‘working retirement’
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- Figure 37: Agreement with the statement ‘I don’t think I will ever fully retire’, October 2016 / October 2017
- Older people less keen on later life entrepreneurship scheme
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- Figure 38: Agreement with the statement ‘It would be a good idea to let people take money from their pension to set up a new business in later life’, by age, October 2017
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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