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Retirement Planning - UK - January 2016

Published By :

Mintel

Published Date : Jan 2016

Category :

Banking

No. of Pages : N/A

It is too early to judge whether pension freedoms has had a generally positive or negative impact on consumers. However, there is no doubt as to the scale of the impact they have already had on the retirement industry. Product providers and advisors are developing new offerings, while regulators are watching closely for warning signs.

Table of Content

Overview

What you need to know

Executive Summary

The retirement planning environment
An ageing population will increase the burden on the state…
Figure 1: Actual and projected life expectancies at 65, by gender, 1981-2062
so more responsibility is being put onto the individual
Figure 2: Pension provisions of UK workers, by type of pension, 2005-14
Pension freedoms have prompted a surge in income drawdown
The consumer
40% have a pension
Figure 3: Savings and investment product ownership, October 2015
Existing pension providers are heavily favoured over others
Figure 4: Non-retired pension holders’ actual and expected use of sources of retirement planning advice/guidance, October 2015
Retirees favoured expert advice
Figure 5: Retirees’ actual and expected use of sources of retirement planning advice/guidance, October 2015
Face-to-face advice is the top choice but online has potential
Figure 6: Interest in using different channels of advice/guidance for retirement planning, October 2015
Employment and property are key to supplementing income
Figure 7: Non-pension incomes expected to be received in retirement, October 2015
Better understanding of retirement options is needed
Figure 8: Understanding of the pension freedoms reforms, October 2015
Figure 9: Confidence in finding information about retirement options, October 2015
People are aware of the need to save, but don’t expect to do enough
Figure 10: Attitudes towards retirement planning, October 2015
What we think

Issues and Insights

Rise of the robo-advisers
The facts
The implications
Are people making the most of increased choice?
The facts
The implications
More awareness, less understanding?
The facts
The implications

The Market – What You Need to Know

An ageing population will increase the burden on the state…
so more responsibility is being put onto the individual
Pension freedoms have prompted a surge in income drawdown
New and old solutions for the advice gap problem

Retirement Planning Environment

Longer lives, longer retirements
Figure 11: Actual and projected life expectancies at 65, by gender, 1981-2062
An older, more dependent population
Figure 12: Percentage of UK population, by age band, and dependency ratios, 2014-64 (based on 2014 projections
Women’s state pension age to rise to 63 in March 2016
Figure 13: Projected dates for full transitions to increase state pension ages, by gender as of 2015

Retirement Funding Options

Auto-enrolment is driving a surge in DC membership…
Figure 14: Pension provisions of UK workers, by type of pension, 2005-14
while membership of personal pension schemes is falling
Figure 15: Number of personal pension schemes in force, 2009-14
60% rise in ISA deposits
Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2008-09/2014/15
Surge in income drawdown as annuities sales plummet
Figure 17: Volume and value of new annuities and income drawdown contracts, 2010-15
The role of property

Retirement Planning Advice Summary

Pension Wise problems
Advice returns to the high street?
Online services seek to plug the advice gap

The Consumer – What You Need to Know

38% of non-retirees have a pension
Existing pension providers are heavily favoured over others
Retirees favour expert advice
Face-to-face advice is the top choice but online has potential
Employment and property are key to supplementing income
Better understanding of retirement options is needed
People are aware of the need to save, but don’t expect to do enough

Savings and Investment Product Ownership

40% of internet users have a pension
Figure 18: Savings and investment product ownership, October 2015
ISAs offer an alternative to pensions
Work to be done to improve youth engagement…
Figure 19: Pension ownership, by age, October 2015
while gender inequality still exists
Figure 20: Pension ownership, by gender, October 2015

Non-retirees’ Use of Sources of Advice/Guidance

Existing pension providers have a big advantage
Figure 21: Non-retired pension holders’ actual and expected use of sources of retirement planning advice/guidance, October 2015
Importance of guidance from family and friends is holding back Pension Wise
Non-pension holders have a healthy appetite for future advice
Figure 22: Non-retired non-pension holders’ actual and expected use of sources of retirement planning advice/guidance, October 2015
Investors are more likely to take advice
Figure 23: Non-retirees’ actual and expected use of sources of retirement planning advice/guidance, by investment ownership, October 2015

Retirees’ Use of Sources of Advice/Guidance

Expert advice was retirees’ top choice when planning for retirement…
Figure 24: Retirees’ actual and expected use of sources of retirement planning advice/guidance, October 2015
but very few plan to take further advice or guidance
Are employers taking a more active role in retirement planning?

Interest in Advice/Guidance Channels

Familiarity of face-to-face advice is unmatched by alternatives…
Figure 25: Interest in using different channels of advice/guidance for retirement planning, October 2015
but interest in online services points to large growth potential

Alternative Retirement Incomes

A third plan to work beyond the state pension age
Figure 26: Non-pension incomes expected to be received in retirement, October 2015
29% of homeowners plan to draw an income from their property
Figure 27: Selected homeowners’ non-pension incomes expected to be received in retirement, October 2015
Inheritance is relied upon by many but estates are being squeezed
Pension holders have a clearer idea of additional income streams
Figure 28: Non-pension incomes expected to be received in retirement, by pension ownership, October 2015

Understanding of Pension Freedoms Reforms

The clear need for guidance and advice…
Figure 29: Understanding of the pension freedoms reforms, October 2015
and better promotion of services
Figure 30: Confidence in finding information about retirement options, October 2015
Pension holders have better understanding of their options
Figure 31: Understanding of the pension freedoms reforms, by pension ownership, October 2015

Attitudes towards Retirement Planning

Just 18% are confident of having a comfortable retirement
Figure 32: Attitudes towards retirement planning, October 2015
A third think too many people leave it too late to plan for retirement
14% expect to be paying a mortgage or rent in retirement
Pension holders are more likely to be confused by retirement options
Figure 33: Agreement with selected attitudes towards retirement planning, by pension ownership, October 2015

Appendix – Data Sources, Abbreviations and Supporting Information

Abbreviations
Consumer research methodology

List of Table

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