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
- 12 million individual pensions in force
- New premium business set to grow strongly over next five years
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- Figure 1: Forecast of new individual pension business – fan chart, 2013-23
- Transfers are the main growth driver
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- Figure 2: Transfers as a share of total new individual pension premiums, by product type, 2014-17
- Direct sales more common in the individual stakeholder pension market
- Auto-enrolment indirectly benefits individual pension providers
- FCA investigates competition in the market for ‘non-workplace’ pensions and introduces new rules for pension transfers
- Companies and brands
- A heavily consolidated market
- SIPP market is more fragmented
- Recent M&A activity
- More companies launch low-cost platform SIPPs
- The consumer
- Scope to improve take-up among the self-employed
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- Figure 3: Ownership of private pensions, by all adults and selected working status groups, September 2018
- Many people have more than one pension
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- Figure 4: Number of pension pots owned, September 2018
- Contributions need to be considered in the context of overall retirement saving
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- Figure 5: Amount contributing to individual pension per month, September 2018
- Significant interest in online account management
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- Figure 6: Proportion of individual pension savers who receive, or are interested in receiving, online account access/management services, product information and other tools and services, September 2018
- Good prospects for pension transfers…
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- Figure 7: Likelihood of undertaking of key pension-related activity within the next three years, September 2018
- …and for future market expansion
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- Figure 8: Proportion of adults who would consider getting an individual pension in the future, September 2018
- Many pension savers are drawn to the benefits of a SIPP
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- Figure 9: Reasons for considering transferring pension assets into a SIPP, by type of pension, September 2018
- What we think
Issues and Insights
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- The market for SIPPs and flexible personal pensions will continue to grow and converge
- The facts
- The implications
- Significant latent demand among the self-employed
- The facts
- The implications
- Potential to grow the children’s pension market
- The facts
- The implications
The Market – What You Need to Know
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- Nearly 12 million individual pensions in force
- Transfers drive new business growth
- Direct sales more common in the individual stakeholder pension market
- Auto-enrolment indirectly benefits individual pension providers
- FCA investigates competition in the market for ‘non-workplace’ pension
Market Size and Forecast
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- Workplace auto-enrolment and consolidation activity have led to fall in the number of in-force individual pensions
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- Figure 10: Individual pension business in force, by product type, 2017
- SIPPs continue to see growth
- Strong rise in new individual pension premiums fuelled by transfers
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- Figure 11: New individual pension business, 2014-18
- Five-year market forecast
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- Figure 12: Forecast of new individual pension business – fan chart, 2013-23
- Figure 13: Forecast of new individual pension business, 2018-23
- A cautionary note
- Forecast methodology
Market Segmentation
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- Significant product crossover
- Stakeholder pensions remain a niche area
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- Figure 14: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2014-18
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- Figure 15: Value of new individual personal pension, stakeholder pension and insured SIPP business, 2014-18
- Transfers account for most new individual pension business
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- Figure 16: Transfers as a share of new individual pension business, by product type, 2014-17
- Total regulated SIPP sales reached nearly 1 million in 2017
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- Figure 17: Number of regulated SIPP, personal pension and stakeholder pension sales, 2013-17
Channels to Market
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- Most new personal pension premiums are generated via IFAs
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- Figure 18: New individual personal pension business, by sales channel, 2014-17
- Non-advised sales are more common in the stakeholder pension market
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- Figure 19: New individual stakeholder pension business, by sales channel, 2014-17
- Most insured SIPP sales are also transacted through advisers
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- Figure 20: New individual insured SIPP business, by sales channel, 2014-17
- Intermediary definitions
Market Drivers
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- DC pension pool boosted by auto-enrolment
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- Figure 21: Number of individual and work-based pensions in force and number of occupational DC members, 2012-17
- Uncertain economic backdrop linked to Brexit could dampen demand for investing in the short term
- Regulatory changes have boosted opportunities for the pension industry
- Pensions Dashboard requires government backing
Recent Regulatory Developments
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- New rules to improve pension transfer advance
- Regulator investigates competitiveness of the individual pension market
- Chancellor resists tinkering further with pension tax relief
- Latest review of auto-enrolment regime shifts focus towards the self-employed
- 1% charge cap on early exit fees
Companies and Brands – What You Need to Know
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- A heavily consolidated market
- SIPP market is more fragmented
- Acquisitions and disposals
- More companies launch low-cost platform SIPPs
Provider Rankings
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- Royal London was promoted to the top spot in 2017, ahead of Aviva
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- Figure 22: Rankings of top 10 providers of insurance-administered individual and group pension business, by total gross premium income, 2017
- Scottish Widows could move back up the rankings with acquisition of Zurich’s workplace pension business
- Notable omissions: Aegon and Legal & General
- Standard Life, AJ Bell and Hargreaves Lansdown are among the largest SIPP providers
Competitive Strategies
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- M&A activity
- Aegon’s acquisition of Cofunds creates the largest intermediary platform
- Embark buys Liberty SIPP’s pension assets
- Strategic developments
- Legal & General sells its life and pensions business to Swiss Re subsidiary
- Curtis Banks unveils new branding and plans for a new SIPP
- Prudential ditches Flexible Retirement Plan as its Retirement Account continues to draw in most new business
- New product launches
- Goji launches low-cost platform SIPP
- DP Pensions launches single-investment SIPP
- Moneyfarm launches a digital SIPP
- Robo-adviser launches digital pension with access to a human adviser
Advertising and Marketing Activity
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- Trivial amount invested in above-the-line advertising
- Fisher Investment uses digital advertising to promote its 15-minute Retirement Plan
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- Figure 23: Total above-the-line, online display and direct mail advertising expenditure on pension products and advice, 2013/14-2017/18
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Scope to improve take-up among the self-employed
- Many people have more than one pension
- Contributions need to be considered in the context of overall retirement saving
- Significant interest in online account management
- Pension transfer activity set to remain strong
- Good prospects for future growth
Ownership of Pensions and Other Retirement Savings
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- A third of the UK’s adult population have an individual pension
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- Figure 24: Type of pension owned, September 2018
- Self-employed are more likely to have an individual pension, but have a low overall take-up
- 12% of adults don’t know if they have an individual or workplace pension
- More than half of all pension savers have at least two separate pension pots
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- Figure 25: Number of pension pots owned, by type of pension, September 2018
- Many adults are also saving for their retirement outside a pension
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- Figure 26: Ownership of other (non-pension) retirement savings, by all adults, pension savers and non-pension savers, September 2018
Pension Contributions
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- Three quarters of individual pension savers are making regular contributions
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- Figure 27: Amount contributing to individual pension per month, by type of pension, September 2018
- Those with a stakeholder pension are most likely to making regular contributions
Pension Access and Management
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- 52% of individual pension savers have online access to their pension…
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- Figure 28: Proportion of individual pension savers who receive, or are interested in receiving, online account access/management services, product information and other tools and services, September 2018
- …but only 38% have full account management capability
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- Figure 29: Interest in provider offering online account access/management services, product information and other tools and services, by type of pension, September 2018
Pension Transfer, Fund Switching and Decumulation Plans
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- Many individual pension savers have plans to switch or transfer funds within the next three years…
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- Figure 30: Likelihood of undertaking of key pension-related activity within the next three years, September 2018
- …underpinning the need for expert advice
- 29% of individual pension savers expect to consider changing platform or provider
- Around one in five individual pension savers aged 52+ are planning to make a withdrawal within the next three years
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- Figure 31: Likelihood of undertaking decumulation-related activity within the next three years, September 2018
New Business Opportunities
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- 11% of adults would consider opening an individual pension for a child
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- Figure 32: Proportion of adults who would consider getting an individual pension in the future, September 2018
- The benefits of a SIPP are attractive to many
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- Figure 33: Reasons for considering transferring pension assets into a SIPP, by type of pension, September 2018
- 31% of all pension savers would consider transferring into a SIPP if it meant lower charges
Appendix – Abbreviations and Data Sources
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Total market forecast – best- and worst-case scenarios
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- Figure 34: Forecast of individual pension premiums – best- and worst-case scenarios, 2018-23
- Regular-premium sector
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- Figure 35: Forecast of new regular-premium individual personal and stakeholder pension business – fan chart, 2013-23
- Figure 36: Forecast of individual personal and stakeholder pension regular premiums – best- and worst-case scenarios, 2018-23
- Single-premium sector
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- Figure 37: Forecast of new single-premium individual personal and stakeholder pension business – fan chart, 2013-23
- Figure 38: Forecast of individual personal and stakeholder pension single premiums – best- and worst-case scenarios, 2018-23
- Forecast methodology
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