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Personal and Stakeholder Pensions - UK - April 2015

Published By :

Mintel

Published Date : Apr 2015

Category :

Banking

No. of Pages : 97 Pages

Concerns have been raised that the new pension freedoms will lead to many making poor decisions when they come to access their pensions in retirement. However, Mintel’s research suggests that consumers should be given more credit. Many are aware of the potential dangers and will likely cautiously evaluate their options, and take advantage of the Pension Wise service, before making any decisions. Indeed, only 4% say they have already made changes as a result of the new pension rules.
Table of Content

Introduction

Abbreviations

Executive Summary

The market
Regular-premium business expected to remain flat over the next five years
Figure 1: Forecast of new personal and stakeholder pension business (regular premiums only) – Fan chart, 2009-19
Rise in transfer business boosts new single premiums
Figure 2: New personal and individual stakeholder pension business – Regular and single premiums, 2010-14
Most sales generated via independent advisers
Market factors
Savings still a priority as wages start to grow ahead of inflation
Auto-enrolment has hurt new business prospects
Competition from other retirement planning products has intensified
Pension freedoms legislation has made saving in a pension much more attractive
Companies, brands and innovation
Top five personal pension providers control over two thirds of the market
Changes in regulatory landscape continue to drive adspend
Product development motivated by regulatory change
The consumer
Just 15% of non-retired adults regularly contributing to a personal pension
Figure 3: Active pension ownership, by scheme type, December 2014
Employers playing an influential role in pension product ownership
Figure 4: Key factors influencing decision to take out a pension plan, December 2014
Few have saved enough to retire comfortably
Figure 5: Value of retirement savings, December 2014
Many aware of pension freedoms legislation, but understanding needs to be improved
Figure 6: Awareness of changes to pension income regulation, December 2014
Few have already changed their plans in reaction to new pension freedoms
Figure 7: Impact of changes in pension income regulation on retirement plans, December 2014
UK savers welcome having more choice with pension savings
Figure 8: Level of agreement with statements about saving for retirement and pensions, December 2014
Confidence in ability to save for retirement
Figure 9: Level of agreement with statements about confidence in ability to save for retirement, December 2014
What we think

Issues and Insights

How much can the market really gain from pension freedoms legislation?
The facts
The implications
Are people responsible enough to handle their new pension freedoms?
The facts
The implications
The workplace may be an ideal place to promote personal pensions
The facts
The implications

Trend Application

The entrepreneurial tech-savvy retiree
Improving engagement with pensions via automation
Trustworthiness now even more important under new pension rules

Market Drivers

Key points
Improving economy contributing to long-awaited real growth in wages
Figure 10: Financial wellbeing index, 2009-15
People are ready to spend but saving remains a top priority
Figure 11: Spending over the last three months and spending plans over the next three months, February 2015
SIPPs gaining mass-market appeal
Figure 12: Volume and value of new SIPP business, 2010-14
ISAs continue to be an attractive pension alternative
Figure 13: Number of ISAs and amounts subscribed, segmented by component type, 2005/06-2013/14
Auto-enrolment has reversed decline in workplace pension participation
Pension freedoms legislation boosts the appeal of pensions
Concerns raised about the dangers of too much freedom
Introduction of a flat rate of tax relief being discussed

Who’s Innovating?

Key points
Regulation and technological advances drive product development
AEGON introduces new at-retirement website and adviser tool
Scottish Widows sets up new retirement website
HSBC launches retirement range of risk-managed funds for defined-contribution pensions
The High Income fund from AEGON
AEGON’s ‘direct retirement’ platform retiready.co.uk
Nutmeg enters personal pensions with its unique approach to investing

Market Size and Forecast

Key points
Sharp decline in new regular and single premiums subsides in 2014
Figure 14: New personal pension and individual stakeholder pension business, 2010-14
Transfer business up by 13% in 2014
Figure 15: Transfers as a share of new personal and individual stakeholder business, 2010-14
Five-year forecast of the value of regular-premium business
Figure 16: Forecast of new personal and stakeholder pension business (regular premiums only) – Fan chart, 2009-19
Figure 17: Forecast of new regular-premium personal pension and individual stakeholder pension business, 2009-19
Forecast methodology
Fan chart explanation

Market Share

Key points
Lloyds Banking Group moves into the top spot in the rankings
Figure 18: Ranking of individual pension providers – UK, by GWP relating to total individual pension business, 2012 and 2013

Companies and Products

Lloyds Banking Group
Company description
Pension portfolio
Distribution
Key financial data
Figure 19: Lloyds Banking Group insurance division full-year results, 2013 and 2014
Recent activity
AEGON
Company description
Pension portfolio
Distribution
Key financial data
Figure 20: Full-year results for UK business of AEGON Group, 2013 and 2014
Recent activity
Aviva
Company description
Pension portfolio
Distribution
Key financial data
Figure 21: Aviva plc value of new UK life and pensions business, 2013 and 2014
Figure 22: Aviva plc UK long-term business market performance, 2012 and 2013
Recent activity
Standard Life
Company description
Pension portfolio
Distribution
Key financial data
Figure 23: Full-year financial data for Standard Life, 2013 and 2014
Recent activity
Royal London Mutual
Company description
Pension portfolio
Distribution
Key financial data
Figure 24: Royal London Mutual value of new UK life and pensions business, 2013 and 2014
Figure 25: Full-year results for Royal London Mutual, 2012 and 2013
Recent activity

Brand Communication and Promotion

Key points
Advertising expenditure on pensions up by a quarter in 2014
Figure 26: Total advertising expenditure on pension products (excluding annuities), 2010-14
Personal and stakeholder pension advertising up by nearly a third
Figure 27: Total advertising expenditure on pension and retirement income products, by sub-category, 2010-14
Half of all adspend attributable to the DWP
Figure 28: Top 10 advertisers of pension products (including retirement income products), 2012-14
Large majority of advertising money spend on TV and press ads
Figure 29: Total advertising expenditure on pension and retirement income product, by media type, 2012-14
A note on adspend

Channels to Market

Key points
The RDR has changed how sales are categorised
Majority of personal pension business sold via independent advisers
Figure 30: New personal pension business, by sales channel, 2013 and 2014
Figure 31: New personal pension business, by sales channel, 2013 and 2014
More than a quarter of individual stakeholder pension sales non-advised
Figure 32: New individual stakeholder pension business, by sales channel, 2013 and 2014
Figure 33: New individual stakeholder pension business, by sales channel, 2013 and 2014

Active Pension Ownership

Key points
Only a minority of adults actively contributing to a personal pension
Figure 34: Active pension ownership, by scheme type, 2012-14
Figure 35: Active pension ownership, by gender and age, December 2014
New pension freedoms should boost personal pension ownership
Higher earners now have even more incentive to save in a pension
Figure 36: Active pension ownership, by gross annual household income, December 2014
Self-employed remain a key target market for personal pensions
Figure 37: Active pension ownership, by working status, December 2014

Key Factors Influencing Decision to Open a Pension

Key points
Employers are driving the take-up of pensions
Figure 38: Key factors influencing decision to take out a pension plan, December 2014
Own research the top factor driving personal pension ownership
Figure 39: Key factors influencing decision to take out a pension plan, by active ownership of select pensions, December 2014
Promoting personal pensions via the workplace

Value of Retirement Savings

Key points
Few have accumulated significant amounts of retirement savings
Figure 40: Value of retirement savings, December 2014
Lack of savings forcing many to delay retirement
Figure 41: Value of retirement savings, by gender and age, December 2014
Savings levels highest among personal pension owners
Figure 42: Value of retirement savings, by active ownership of select pensions, December 2014
Figure 43: Value of retirement savings, by working status, December 2014
Improving engagement the key to boosting savings levels

Awareness of Changes to Pension Income Legislation

Key points
Two thirds of adults aware of the 2014 Budget changes to pensions
Figure 44: Awareness and understanding of changes to pension income legislation, December 2014
Awareness and understanding highest among retirees
Figure 45: Awareness and understanding of changes to pension income legislation, by age, working status and gross annual household income, December 2014
Personal pension owners most aware of new pension freedoms
Figure 46: Awareness and understanding of changes to pension income legislation, by active ownership of select pensions, December 2014

Impact of Pension Legislation on Retirement Plans

Key points
Only a minority are ready to adapt their retirement plans in response to the new rules
Figure 47: Impact of changes in pension income legislation on retirement plans, December 2014
Younger adults most inclined to make changes
Figure 48: Impact of changes in pension income legislation on retirement plans, by age, December 2014
Non-retired over-45s will need the most help in the near term
Those with £50,000 plus in savings twice as likely to have changed plans
Figure 49: Impact of changes in pension income legislation on retirement plans, by value of retirement savings, December 2014
Personal pension owners are most open to adjusting their plans
Figure 50: Impact of changes in pension income legislation on retirement plans, by active ownership of select pensions, December 2014

Attitudes towards Saving for Retirement and Pensions

Key points
British public strongly behind the notion of greater pension freedoms
Figure 51: Attitudes towards saving for retirement and pensions, December 2014
Higher earners most wary about pitfalls of easier access to funds
Figure 52: Level of agreement with statement ‘I’m worried that easier access to pension funds will mean that people will waste the money’, by gross annual household income, December 2014
Frequent rule changes make planning for retirement more difficult
Many still need convincing that saving in a pension is the best option
Pension owners more aware they can’t totally rely on the government
Figure 53: Agreement with statements about saving for retirement and pensions, by active ownership of select pensions, December 2014

Confidence in Ability to Save for Retirement

Key points
Many adults are worried about their prospects in retirement
Figure 54: Level of agreement with statements about confidence in ability to save for retirement, December 2014
Apathy preventing many from taking action
People need to be shocked into action
35-44-year-olds the most likely to be worried
Figure 55: Level of agreement with statements about confidence in ability to save for retirement, by gender and age, December 2014
Those in the family lifestage need simple low-cost solutions
Owning a pension on its own not enough to ease concerns…
Figure 56: Agreement with statements about confidence in ability to save for retirement, by active ownership of select pensions, December 2014
…but having more money helps
Figure 57: Agreement with statements about confidence in ability to save for retirement, by value of retirement savings, December 2014
Figure 58: Level of agreement with statements about confidence in ability to save for retirement, by gross annual household income, December 2014

Appendix – Market Size and Forecast

Figure 59: Forecast of new personal and individual stakeholder pension business (regular premiums only) – Best- and worst-case scenario, 2014-19

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