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RETIREMENT PLANNING - UK - JANUARY 2018

Published By :

Mintel

Published Date : Jan 2018

Category :

Banking

No. of Pages : N/A

As people continue to live longer and the government moves to limit the burden on the state, effective retirement planning will become more important than ever before. Older people are working for longer, whether out of necessity or choice. Initiatives such as the Pensions Dashboard will help encourage people to save more, but there is a tendency to rely too heavily on others to help fund retirement.

Table of Contents

OVERVIEW
What you need to know
EXECUTIVE SUMMARY
The market
The length of the average retirement is growing
Figure 1: Expectation of life for those aged 65 in each year, period principal projection, UK, 1981-2064
Auto-enrolment has boosted workplace pension ownership
Figure 2: Proportion of employees with workplace pensions, by pension type, 1997-2016
The consumer
Almost two thirds have at least one pension product
Figure 3: Pension product ownership, October 2017
More than half have financial products other than pensions for retirement
Figure 4: Other savings and investment products held for retirement, by age, October 2017
Friends and family top the list of most likely sources
Figure 5: Most likely advice and guidance sources, October 2017
A quarter expect to increase contributions as they age
Figure 6: Outlook for retirement savings contributions, October 2017
Less than a third expect their standard of living to decline in retirement
Figure 7: Outlook for standard of living in retirement, October 2017
Non-retirees show frustration at moving state pension goalposts
Figure 8: Attitudes towards retirement and retirement planning, October 2017
What we think
ISSUES AND INSIGHTS
Working later in life is becoming an accepted norm, particularly for women
The facts
The implications
Relying on friends and family in retirement may undermine other planning
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
The length of the average retirement is growing
Auto-enrolment has boosted workplace pension ownership
FCA and the government focus on improving support
RETIREMENT PLANNING ENVIRONMENT
The length of the average retirement is growing
Figure 9: Expectation of life for those aged 65 in each year, period principal projection, UK, 1981-2064
Longer life expectancy means a greater dependence on state support
Figure 10: UK population, by age band, and dependency ratios, 2016-86 (based on 2016 projections)
The rate of increase in the state pension age has been accelerated
Figure 11: Projected dates for full transitions to increase state pension ages, by gender
RETIREMENT FUNDING OPTIONS
Auto-enrolment has boosted workplace pension ownership
Figure 12: Proportion of employees with workplace pensions, by pension type, 1997-2016
Millennials to bear the brunt of the drop-off in DB schemes
Figure 13: Proportion of employees with workplace pensions by age band and type of pension, 2016
Figure 14: Proportion of employee jobs with workplace pensions, by type of pension, 2016
Fewer personal pensions are being arranged
Figure 15: Number of new individual personal and stakeholder pensions, 2011-16
Lifetime ISA reframes ISAs as retirement savings vehicles
Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2010/11-2016/17
Annuity sales have been outpaced by income drawdown
Figure 17: Volume of new annuity and income drawdown sales, 2012-16
One in ten people aged 65+ are still working
Figure 18: Employment rate among people aged 65+, Q1 2010-Q3 2017
Buy-to-let regulation could discourage retirement planning linked to property
Figure 19: New buy-to-let mortgages, by purpose of loan, not seasonally adjusted, 2011-16*
REGULATORY AND LEGISLATIVE CHANGES
Pensions Dashboard prototype goes live
Three advisory firms due to merge into one
New rules mean annuity providers must encourage shopping around
THE CONSUMER – WHAT YOU NEED TO KNOW
Almost two thirds have at least one pension product
More than half have financial products other than pensions for retirement
Friends and family top the list of most likely sources of information
A quarter expect to increase contributions as they age
Less than a third expect their standard of living to decline in retirement
Non-retirees show frustration at moving state pension goalposts
PENSION PRODUCT OWNERSHIP
Almost two thirds have at least one pension product
Figure 20: Pension product ownership, October 2017
Younger Millennials lag behind on workplace pension ownership
Figure 21: Pension product ownership, by generation, October 2017
Pension ownership falls among lower earners
Figure 22: Pension product ownership, by gross annual household income, October 2017
OTHER PRODUCTS AND PLANS FOR RETIREMENT
More than half plan to use non-pension savings and investments to fund retirement
Figure 23: Other savings and investment products held for retirement, October 2017
25-34s are at risk of poor returns on cash savings
Figure 24: Other savings and investment products held for retirement, by age, October 2017
A third of non-retired people plan to fund retirement through an earned income…
Figure 25: Other retirement funding plans, October 2017
… rising to 46% of non-retired females aged 55+
Figure 26: Other retirement funding plans, by age and gender, October 2017
Half of non-retired people focus on 1-3 alternative products and plans
Figure 27: Number of other savings/investment products and retirement funding plans, combined repertoire, October 2017
MOST LIKELY ADVICE AND GUIDANCE SOURCES
Friends and family top the list of most likely sources
Figure 28: Most likely advice and guidance sources, October 2017
Personal pension holders more likely to take formal advice
Figure 29: Most likely advice and guidance sources, by pension product ownership, October 2017
Younger people recognise they will need support
Figure 30: Use of any advice source, October 2017
OUTLOOK FOR RETIREMENT SAVINGS CONTRIBUTIONS
A quarter expect to increase contributions as they age
Figure 31: Outlook for retirement savings contributions, October 2017
Good intentions to increase contributions weaken as people age
Figure 32: Outlook for retirement savings contributions, October 2017
People with alternative retirement funding plans are still more likely to say savings will increase
Figure 33: Outlook for retirement savings contributions, by other retirement funding plans, October 2017
OUTLOOK FOR STANDARD OF LIVING IN RETIREMENT
Less than a third expect their standard of living to decline in retirement
Figure 34: Outlook for standard of living in retirement, by outlook for retirement savings contributions, October 2017
Younger people are more optimistic about an improvement in their standard of living
Figure 35: Outlook for standard of living in retirement, October 2017
ATTITUDES TOWARDS RETIREMENT AND RETIREMENT PLANNING
Non-retirees show frustration at moving state pension goalposts
Figure 36: Attitudes towards retirement and retirement planning, October 2017
Scammers are undermining confidence in retirement planning
Just a quarter have made plans for future care needs
People are facing up to the reality of a ‘working retirement’
Figure 37: Agreement with the statement ‘I don’t think I will ever fully retire’, October 2016 / October 2017
Older people less keen on later life entrepreneurship scheme
Figure 38: Agreement with the statement ‘It would be a good idea to let people take money from their pension to set up a new business in later life’, by age, October 2017
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

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