Workplace Pensions - UK - June 2019

OVERVIEW
What you need to know
Scope of this Report
Trust-based pensions
Contract-based pensions
EXECUTIVE SUMMARY
The market
Pension business continues to grow…
…driven mainly by single-premium contracts
Figure 1: New workplace pension business (volume and value), by type of premium, 2014-18
Completion of auto-enrolment stages signals stabilisation
Figure 2: Forecast of the volume of new workplace pension contracts, 2014-24
Pension ownership continues to rise
Defined-contribution schemes account for 98% of auto-enrolment
First Pensions Dashboard expected in 2019
DWP launches consultation on the consolidation of DB schemes
Ban on pension cold-calling comes into force
Deadline for master trusts authorisation
Companies and brands
PIC claims top spot in trust-based pension business
Royal London biggest provider of individual and work-based sector
Providers making pensions more accessible
Pensions, savings and financial wellbeing
The consumer
73% of workers are enrolled
Figure 3: Workplace pension enrolment, March 2019
Confusion persists over type of pension held
Figure 4: Type of workplace pension enrolled in, March 2019
Majority are aware of the increase to minimum contributions
Figure 5: Awareness of the minimum contribution increase, March 2019
Workers less likely to make voluntary contributions
Figure 6: Pension contribution intentions, March 2019
Government expected to educate people…
Figure 7: Top parties responsible for educating people about pensions, March 2019
…and trusted to run Pensions Dashboards
Figure 8: Trust in Pensions Dashboards providers, March 2019
More than half of workplace pension holders are interested in joining a Pensions Dashboard
Figure 9: Willingness to join a Pensions Dashboard, March 2019
Fees and lack of knowledge are the biggest obstacles to pension pot consolidation
Figure 10: Barriers to pension pot consolidation, March 2019
What we think
ISSUES AND INSIGHTS
Pensions Dashboards need to go live with a bang…
The facts
The implications
…but security will be paramount
The facts
The implications
Pensions Dashboards and pot consolidation
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Pension business continues to grow…
…driven mainly by single-premium contracts
Pension ownership continues to rise
Defined-contribution schemes account for 98% of auto-enrolment
First Pensions Dashboard expected in 2019
DWP launches consultation on the consolidation of DB schemes
Ban on pension cold-calling comes into force
Deadline for master trusts authorisation
MARKET SIZE AND FORECAST
Pension business continues to grow…
Figure 11: New workplace pension business (volume and value), 2014-18
…driven mainly by single-premium contracts…
Figure 12: New workplace pension business (volume and value), by type of premium, 2014-18
…but the market is entering a steady phase
Figure 13: Forecast of the volume of new workplace pension contracts, 2014-24
Figure 14: Forecast of the volume of new workplace pension contracts, 2014-24
Forecast methodology
TRENDS IN WORKPLACE PENSION OWNERSHIP
76% of employees are members of a workplace pension scheme
Figure 15: Proportion of employees with workplace pensions, 1997-2018
Private sector employee contribution in line with minimum requirements
Figure 16: Percentage of salary personally contributed by employees with workplace pensions, by sector, 2016-18
Type of pension owned
Figure 17: Employees with workplace pensions, by type of pension and sector, 2018
MARKET DRIVERS
Employers continue to meet auto-enrolment duties
Figure 18: Declarations of compliance, April 2019
Defined-contribution schemes account for 98% of auto-enrolment
Figure 19: Pension scheme used for auto-enrolment, 2017 and 2018
At least 180,000 employers expected to have duties by 2020/21
Figure 20: Quarterly forecast of employers due to comply with auto-enrolment, 2018/19-2020/21
REGULATORY AND LEGISLATIVE CHANGES
Phased increase to minimum contributions enters final stage
Figure 21: Minimum employer and staff contributions to be paid to workplace pensions
First Pensions Dashboard expected in 2019
Single Financial Guidance Body renamed Money and Pensions Service
DWP launches consultation on the consolidation of DB schemes
Ban on pension cold-calling comes into force
Changes in State Pension age
FCA calls for “wake up” information packs to support workers on pension decisions
Deadline for master trusts authorisation
FCA and The Pensions Regulator launch joint strategy
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
PIC claims top spot in trust-based pension business
Royal London biggest provider of individual and work-based sector
Providers making pensions more accessible
Pensions, savings and financial wellbeing
Pensions in the FCA’s regulatory sandbox
Adspend exceeds £50 million
PROVIDER RANKINGS
PIC claims top spot in trust-based pension business
Figure 22: Rankings of top 20 providers of trust-based pension business, by gross written premiums, 2015-17
Royal London becomes biggest provider of individual and work-based sector
Figure 23: Rankings of top 20 providers of individual and work-based pension business, by gross written premiums, 2015-17
COMPETITIVE STRATEGIES
LBG’s online and mobile banking integrate Scottish Widows pensions
Legal & General launches financial wellbeing platform
PensionBee introduces three new plan options
Pensions in the FCA’s regulatory sandbox
“Alexa, ask Aviva for my pension value”
Pensions and money advice in the workplace
Workplace ISAs as a complement to pensions
ADVERTISING AND MARKETING ACTIVITY
Above-the-line expenditure exceeds £50 million
Figure 24: Total above-the-line, online display and direct mail advertising expenditure on pension products and advice, 2014/15-2018/19*
Digital channels account for two thirds of spend
Figure 25: Above-the-line, online display and direct mail advertising expenditure on pension products and advice, by media type, 2018/19*
99% of adspend concentrated in top 10 spenders
Figure 26: Top 10 above-the-line, online display and direct mail advertisers of pension products and advice, 2017/18-2018/19*
Other industry campaigns
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
73% of workers are enrolled
Confusion persists over type of pension held
Majority are aware of the increase to minimum contributions
Workers less likely to make voluntary contributions
Government expected to educate people…
…and trusted to run Pensions Dashboards
More than half of workplace pension holders are interested in joining a Pensions Dashboard
Fees and a lack of knowledge are the biggest obstacles to pot consolidation
PENSION ENROLMENT
73% of workers are enrolled
Figure 27: Workplace pension enrolment, March 2019
TYPE OF WORKPLACE PENSION SCHEME
Almost half of workers believe they are enrolled in a DB scheme
Technology should help improve engagement and understanding
Figure 28: Type of workplace pension enrolled in, by sector, March 2019
AWARENESS OF THE MINIMUM CONTRIBUTION INCREASE
Overall good levels of awareness…
Figure 29: Awareness of the minimum contribution increase, March 2019
…but there are important differences by demographics
PENSION CONTRIBUTION INTENTIONS
Workers less likely to make voluntary contributions
The risk of mass opt-outs remains low
Figure 30: Pension contribution intentions, March 2019
Rainy day vs retirement
Seamless spending and seamless saving
EDUCATING PEOPLE ABOUT PENSIONS
Government and employers expected to guide people
Figure 31: Top parties responsible for educating people about pensions, March 2019
People recognise the importance of schools
Figure 32: Parties responsible for educating people about pensions, rank, March 2019
WILLINGNESS TO ENGAGE WITH PENSIONS DASHBOARDS 
The concept of Pensions Dashboards appeals to the majority
Figure 33: Willingness to join a Pensions Dashboard, March 2019
No, or don’t know?
Parents of young children are an important demographic
Figure 34: Willingness to join a Pensions Dashboard – CHAID – Tree output, March 2019
TRUST IN PENSIONS DASHBOARD PROVIDERS
Once again, the government comes top in terms of trust
Pensions Dashboards and Open Banking
Figure 35: Trust in Pensions Dashboards providers, March 2019
BARRIERS TO PENSION POT CONSOLIDATION
Fees are the biggest single obstacle…
…but educating people is even more relevant
Figure 36: Barriers to pension pot consolidation, March 2019
Pensions Dashboards and pot consolidation
The DIY group: over-confident?
The cautious: tools and advice welcome
Figure 37: Barriers to pension pot consolidation, by willingness to engage with Pensions Dashboards, March 2019
People more likely to have one main barrier
Figure 38: Repertoire of barriers to pension pot consolidation, March 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID analysis methodology
Figure 39: Willingness to join a Pensions Dashboard – CHAID – Table output, March 2019
Figure 40: Willingness to join a Pensions Dashboard – CHAID – Table output, March 2019
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
Figure 41: Best- and worst-case forecast of the volume of new workplace pension contracts, 2019-24