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Workplace Pensions - UK - June 2019
Overview
 
What you need to know 
Auto-enrolment has increased the number of people saving in a pension by 10 million since its launch in 2012. 73% of employees are now enrolled in a workplace pension, but many are confused regarding the type of scheme and, crucially, its implication on their income at retirement. Engagement remains a challenge, but there are good overall levels of awareness of the latest increase to minimum contributions. This also shows that high-profile and industry campaigns have a positive impact on consumers, and these will be vital going forwards for Pensions Dashboards to be a success.

This Report looks at the UK workplace pension sector. It includes the size of the market and its key drivers, such as regulatory changes, leading to a five-year forecast for new contracts. The Report also considers the main industry providers and their competitive strategies. Mintel’s exclusive consumer research explores workplace pension ownership and the type or scheme people are enrolled in. It measures awareness of the latest minimum contribution increase and its impact on workers’ intentions regarding their pension. Looking forward to the introduction of Pensions Dashboards, the Report looks at willingness to take part in such a scheme and type of provider most likely to be trusted to run one, and any possible barriers to multiple pot consolidation.

Scope of this Report
There are various types of workplace pension, which can be broadly segmented into two main groups: occupational trust-based schemes and group contract-based pensions.

The focus of this Report is on insurance-administered workplace schemes, comprising funded occupational pensions, group personal pensions (GPPs) and group stakeholder pensions (GSPs).

Trust-based pensions
An occupational pension is a scheme organised by an employer, or on behalf of a group of employers, to provide benefits for employees on their retirement and for their dependents on their death. Legally, an occupational scheme is defined as one that has scheme trustees and is governed by trust law and, thus, may also be referred to as a trust-based scheme.

Occupational pensions come in two main forms: defined-benefit (DB) or salary-related (eg final salary, career average salary) and defined-contribution (DC) or money-purchase schemes.

A master trust is a multi-employer, trust-based scheme that differs only from a normal trust-based DC scheme in that it is open to the employees of many employers, the staff of which are all treated equally and follow the same rules.

NEST (National Employment Savings Trust) is a master trust DC pension scheme set up by the government to help employers meet new workplace pension duties. NEST offers low charges, with an annual management charge of 0.3% plus a 1.8% charge on new member contributions, flexible contributions and online access. The scheme is run by the NEST Corporation, a non-departmental public body of trustees.

Contract-based pensions
A group personal pension is a collection of personal pensions, arranged by an employer for its employees. GPPs are run by pension providers (usually an insurance company) and managed on a group basis. They may have lower charges than individual personal pensions, because the provider may offer the employer a discount for the volume of policies.

Group stakeholder pensions, also known as employer-sponsored stakeholder pensions, are similar to GPPs in that they are group schemes with the same rules for eligibility, transfers, benefits, contributions and taxation. However, GSPs must meet a set of conditions, laid down by the government, relating to charging structure, penalties and minimum contributions.

All contract-based pensions are DC arrangements.

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