Table of Contents
Overview
Executive Summary
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- The market
- Length of average retirement set to continue rising
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- Figure 1: Expectation of life for those aged 65 in each year, period principal projection, by gender, UK, 1981-2066
- Over 41 million UK adults now have a workplace pension
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- Figure 2: Number of employees with workplace pensions, by pension type, 2009-17
- The consumer
- 62% of non-retired adults own a pension
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- Figure 3: Pension product ownership, October 2018
- Most foresee drawing on non-pension sources of funding in retirement
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- Figure 4: Other savings and investment products held for retirement, October 2018
- Just two in five have taken any steps to plan for retirement
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- Figure 5: Retirement planning steps taken, October 2018
- Few currently interested in new retirement planning technologies
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- Figure 6: Retirement planning tools and services most likely to consider, October 2018
- Majority are open to working beyond state pension age
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- Figure 7: Attitudes towards retirement and retirement planning, October 2018
- Situational limitations and conflicting priorities main barriers to retirement planning
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- Figure 8: Barriers to retirement planning, October 2018
- What we think
Issues and Insights
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- Millennials’ views about retirement indicate rising demand for flexible solutions
- The facts
- The implications
- Resistance to new technologies preventing greater engagement in retirement planning
- The facts
- The implications
The Market – What You Need to Know
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- Ongoing improvements in longevity have altered retirement planning
- Over 41 million now have a workplace pension thanks to auto-enrolment
- The SIPP market has grown significantly in recent years
- Most currently going into drawdown at retirement
- Proportion working beyond retirement age on the rise
- Recent government initiatives have struggled to provide support
Retirement Planning Environment
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- The average length of time in retirement set to keep rising
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- Figure 9: Expectation of life for those aged 65 in each year, period principal projection, by gender, UK, 1981-2066
- Improving longevity is putting increased pressure on state finances
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- Figure 10: UK population, by age band, and dependency ratios, 2016-86 (Based on 2016 projections)
- State pension age eligibility being progressively pushed back
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- Figure 11: Projected dates for full transitions to increase in state pension ages, by gender
Retirement Funding Options
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- 41 million employees have a workplace pension
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- Figure 12: Number of employees with workplace pensions, by pension type, 2009-17
- DC pensions require savers to be more switched on
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- Figure 13: Proportion of employee jobs with workplace pensions, by type of pension, 2017
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- Figure 14: Proportion of employees with workplace pensions, by age band and type of pension, 2017
- ABI data reports falling new individual pension business
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- Figure 15: Number of new individual personal and stakeholder pensions, 2012-17
- Regulated SIPP sales volumes nearly reached 1 million in 2017
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- Figure 16: Number of regulated SIPP, personal pension and stakeholder pension sales, 2013-17
- Lifetime ISA offers savers a new pension-like alternative
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- Figure 17: Number of ISAs and amounts subscribed, by component type, 2011/12-2017/18
- Drawdown now the default option for many at retirement
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- Figure 18: Volume of new annuity and income drawdown sales, 2013-17
- More people expected to work past 65
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- Figure 19: Employment rate among people aged 65+, Q1 2011-Q3 2018
- Equity release is increasingly popular to fill gaps in retirement funding
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- Figure 20: Sales of equity release products, by volume and value, 2011-17
- Buy-to-let property has become a less attractive savings alternative
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- Figure 21: New buy-to-let mortgages, by purpose of loan, not seasonally adjusted, 2012-17
Regulatory and Legislative Changes
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- Pensions dashboard set to be launched in 2019
- Single Financial Guidance Body to go into service from January 2019
- Annuity customers must be made aware of best available market rates
- Government initiatives to boost the use of pension advice have flopped
The Consumer – What You Need to Know
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- 62% of non-retired adults own a pension
- Most envision drawing on non-pension sources of funding in retirement
- Few are actively planning for their retirement
- Millennials have distinct views about retirement
- Situational limitations and other priorities key barriers to engagement
Pension Product Ownership
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- Four in five full-time employees have a pension
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- Figure 22: Pension product ownership, October 2018
- Fewer than half of Younger Millennials own a pension
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- Figure 23: Pension product ownership, by generation, October 2018
- Lower earners least likely to have a pension
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- Figure 24: Pension product ownership, by gross annual household income, October 2018
Other Products and Plans for Retirement
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- Half plan to use cash savings to help fund their retirement
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- Figure 25: Other savings and investment products held for retirement, October 2018
- Under-35s most likely to plan on using cash
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- Figure 26: Other savings and investment products held for retirement, by age, October 2018
- Over the long run, returns on cash savings liable to disappoint
- Pension owners more likely to be engaged in retirement planning
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- Figure 27: Other savings and investment products held for retirement, by pension ownership, October 2018
- 60% plan to use a non-financial services-related resource in retirement
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- Figure 28: Other retirement funding plans, October 2018
Retirement Planning Activity
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- Most non-retired adults have not done any retirement planning
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- Figure 29: Retirement planning steps taken, October 2018
- Just 28% are regularly saving for retirement
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- Figure 30: Retirement saving activity, October 2018
- Pension ownership boosts activity
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- Figure 31: Retirement planning steps taken, by pension ownership, October 2018
- Women lag behind men in retirement planning activity
- The quality of engagement needs improvement
Interest in Retirement Planning Services
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- Interest in new retirement planning technologies is lacking…
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- Figure 32: Retirement planning tools and services most likely to consider, October 2018
- …but is notably higher among pension owners and younger generations
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- Figure 33: Retirement planning tools and services most likely to consider, by generation, October 2018
Attitudes towards Retirement and Retirement Planning
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- Most are prepared to consider working beyond state pension age
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- Figure 34: Attitudes towards retirement and retirement planning, October 2018
- Working into retirement a less daunting prospect for the affluent
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- Figure 35: Agreement with selected statements about retirement and retirement planning, by socio-economic group, October 2018
- Millennials’ views can vary greatly from other generations’
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- Figure 36: Agreement with selected statements about retirement and retirement planning, by generation, October 2018
- Pension scams threaten to put younger people off using pensions
Barriers to Retirement Planning
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- 77% identify a specific barrier to engagement in retirement planning
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- Figure 37: Barriers to retirement planning, October 2018
- For most, just one or two things are getting in the way
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- Figure 38: Number of barriers to retirement planning, October 2018
- Figure 39: Barriers to retirement planning, by number of barriers to retirement planning, October 2018
- 35% of Millennials identify three or more barriers
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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