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Personal Pensions and SIPPs - UK - December 2019

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
New premium income falls for the second year in a row…
…and is set to continue its decline
Figure 1: Forecast of new individual pension business – fan chart, 2014-24
SIPP sales also fall for the second consecutive year
Figure 2: Number of regulated SIPP, personal pension and stakeholder pension sales, 2015-19
Non-advised sales the best-performing channel…
Average individual pension contributions fell in 2017/18
Figure 3: Personal and stakeholder pension annual contributions, 2013/14-2017/18
…while the self-employed continue to remain unengaged
Figure 4: Number of self-employed personal and stakeholder pension members and total contributions, 2013/14-2017/18
New wake-up packs enter the market
Companies and brands
Royal London retains top spot
A fall in DB transfers hits the larger SIPP providers
AJ Bell prioritises advised customers
Penfold focuses on the self-employed
The consumer
Confusion around pension ownership
Figure 5: Type of pension owned, September 2019
Almost half of workplace pension savers are not saving anywhere else
Individual pension holders expect to turn to financial advice
Figure 6: Agreement with attitudes towards pensions and retirement planning, by pension ownership, September 2019
Just 6% intend to open an individual pension
Figure 7: Agreement with attitudes towards pensions and future retirement plans, by pension ownership, September 2019
Converting interest into ownership is a challenge
Individual pension holders are more engaged
Clarity and transparency are key factors
Figure 8: Important factors among owners of individual pensions, September 2019
What we think
ISSUES AND INSIGHTS
Innovation and flexibility needed to drive ownership among the self-employed
The facts
The Implications
Providers cannot rely on wake-up packs to attract Gen-Xers
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
New single-premium income falls for the second year in a row…
…driven by a decline in single-premium personal pensions
SIPP sales also fall for the second consecutive year
Non-advised sales the best-performing channel
Average individual pension contributions fell in 2017/18…
…while the self-employed continue to remain unengaged
New wake-up packs enter the market
MARKET SIZE AND FORECAST
Slight fall in the number of in-force individual pensions in 2018
Figure 9: Individual pension business in force, by product type, 2018
SIPPs account for 34% of the non-workplace pensions market
New single-premium income set to fall for the second consecutive year
Figure 10: New individual pension business, 2015-19
New individual pension business to continue to decline
Figure 11: Forecast of new individual pension business – fan chart, 2014-24
Figure 12: Forecast of new individual pension business, 2014-24
Forecast methodology
MARKET SEGMENTATION
New single-premium pensions set to fall by 20%
Stakeholder pensions continue their decline
Figure 13: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2015-19
Figure 14: Value of new individual personal pension, stakeholder pension and insured SIPP sales, 2015-19
SIPP sales decline for the second year running, but still dwarf other individual pensions market
Figure 15: Number of regulated SIPP, personal pension and stakeholder pension sales, 2015-19
Regulatory scrutiny has hampered pension transfers
Figure 16: Transfers as a share of new individual pension business, by product type, 2015-18
CHANNELS TO MARKET
Non-advised sales increase across the board…
…with SIPPs the main beneficiary
Sharp decline in adviser sales for personal and stakeholder pensions
Figure 17: New individual personal pension business, by sales channel, 2015-18
Figure 18: New individual stakeholder pension business, by sales channel, 2015-18
Figure 19: New individual insured SIPP business, by sales channel, 2015-18
MARKET DRIVERS
Auto-enrolment drives increased workplace pension membership
Figure 20: Membership of occupational pension schemes, by membership type, UK, 2008-18
Employers drive increased personal pension contributions
Figure 21: Personal and stakeholder pension annual contributions, 2013/14-2017/18
Self-employed personal pension members and contributions fall
Figure 22: Number of self-employed personal and stakeholder pension members and total contributions, 2013/14-2017/18
REGULATORY AND LEGISLATIVE ENVIRONMENT 
The Pension Schemes Bill is introduced
With a focus on the Pensions Dashboard…
…and tackling pension transfer fraud
Attention turns to improving the advice and speed of transfers
Through the FCA…
…and industry bodies
Wake-up pack revamp could increase engagement…
…while the DWP prioritises the self-employed
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Royal London retains top spot
A fall in DB transfers hits the larger SIPP providers
AJ Bell prioritises advised customers
New D2C products enter the market
Penfold focuses on the self-employed
PROVIDER RANKINGS
Royal London retains top spot
Figure 23: Rankings of top 10 providers of insurance-administered individual and group pension business, by total gross premium income, 2017 and 2018
Decrease in DB transfers affects larger SIPP providers
COMPETITIVE STRATEGIES
Established brands focus on improving engagement
Lloyds and Scottish Widows
L&G’s own Pensions Dashboard
AJ Bell focusses on the advised market
LV= unveils a new range of ESG funds
New D2C products become more commonplace
Through Fintech apps…
…and D2C investment platforms
New digital-only provider Penfold focuses on the self-employed
THE CONSUMER – WHAT YOU NEED TO KNOW
Confusion around pension ownership
Almost half of workplace pension savers are not saving anywhere else
Individual pension holders expect to turn to financial advice
Just 6% intend to open an individual pension
Converting interest into ownership is a challenge
Individual pension holders are more engaged
Clarity and transparency are key factors
PENSION OWNERSHIP
Three quarters own a pension…
…but there is confusion around type of pension held
Significant scope for greater targeting of the self-employed
Figure 24: Type of pension owned, September 2019
Most individual pension holders own more than one pot
Figure 25: Number of pension pots owned, by pension ownership, September 2019
OTHER RETIREMENT SAVINGS
48% are relying on their workplace pension
Figure 26: Other retirement savings methods, by pension ownership, September 2019
Convincing existing investors should be a key focus
Figure 27: Other retirement savings methods, by financial situation, September 2019
ATTITUDES TOWARDS PENSIONS AND RETIREMENT PLANNING
Individual pension holders are more confident about pensions…
Figure 28: Agreement with attitudes towards pensions, by pension ownership, September 2019
…and are more likely to seek financial advice about their pension
Millennials have good intentions but need help
Figure 29: Agreement with attitudes towards pensions and retirement planning, by pension ownership, September 2019
FUTURE RETIREMENT PLANS
Just 6% plan on opening an individual pension within the next two years
Millennials show more enthusiasm…
…but Gen-Xers need to be convinced
Figure 30: Agreement with attitudes towards pensions and future retirement plans, by pension ownership, September 2019
Converting interest to ownership among the self-employed will be key
Figure 31: Agreement with attitudes towards pensions and future retirement plans, by employment status, September 2019
Individual pensions not a front-of-mind retirement planning solution
Figure 32: Agreement with attitudes towards pensions and future retirement plans, by response to the statement ‘I am currently planning for retirement’, September 2019
PENSION ENGAGEMENT
Personal pension holders are more engaged
Figure 33: Pension engagement, by pension ownership, September 2019
Pension engagement split between online and offline methods
Figure 34: Channels used to check on the value of a pension, by pension engagement, September 2019
INDIVIDUAL PENSIONS: MOST IMPORTANT FACTORS
Clarity is the most important factor for individual pension holders
Convenience is also a priority
Figure 35: Important factors among owners of individual pensions, September 2019
Scope for greater product development across the market…
…but there are significant obstacles when it comes to ethical investments
Members who prioritise convenience save for retirement in many ways
Figure 36: Other retirement savings methods, by important factors among owners of individual pensions, September 2019
Established brands have a distinct advantage
Figure 37: TURF Analysis – Important factors among owners of individual pensions, September 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
Turf analysis methodology
Figure 38: Table – TURF Analysis – personal pensions and SIPPs, September 2019
APPENDIX – MARKET SIZE AND FORECAST
Total market forecast – best- and worst-case scenarios
Figure 39: Forecast of individual pension premiums, best- and worst-case scenarios, 2019-24
Individual personal and stakeholder pension business – Regular premiums
Figure 40: Forecast of new regular-premium individual personal and stakeholder pension business – fan chart 2014-24
Figure 41: Forecast of regular-premium individual pension premiums, best- and worst-case scenarios, 2019-24
Individual personal and stakeholder pension business – Single premiums
Figure 42: Forecast of new single-premium individual personal and stakeholder pension business – fan chart 2014-24
Figure 43: Forecast of single-premium individual pension premiums, best- and worst-case scenarios, 2019-24
Forecast methodology

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