Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Saving from birth
- A vision of future pension marketing campaigns
Market in Brief
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- New business levels down for second successive year
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- Figure 1: New APE* personal pension and individual stakeholder pension premiums, 2005-09
- Economic uncertainty, poor fund performance and rising longevity
- Internal market and regulatory developments
- Tied agents gaining a greater share of distribution
- Top five providers responsible for 54% of all business
- Personal pension adspend has doubled in the past year
- Competitive context
- Key consumer research findings
- Pension ownership
- Attitudes towards pensions
- Confidence in retirement savings
Internal Market Environment
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- Key points
- Private sector workplace pension provision continues to decline
- Individual pension products can help fill the gap
- Pension participation will recover with auto-enrolment in 2012
- Market for individual pensions and NEST
- Regulatory and legislative developments
- FSA criticism of pension switching advice leads to decline in transfers
- Limited pension tax relief for high earners from April 2011
- Government unpredictability
- Protected rights funds can now be put in any type of SIPP
- RDR will impact product design and distribution
Broader Market Environment
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- Key points
- Despite emerging from recession difficulties remain
- Pension industry should benefit from an increased focus on saving
- As longevity increases so could demand for personal pensions
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- Figure 2: Cohort life expectancy at age 60, by gender, 1981-2056
- Save more or work longer
- Markets rallied in 2009 but many will never fully recover their pensions
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- Figure 3: FTSE 100 and FTSE All Share – daily index movements, February 2004-February 2010
- Pension tax relief will look more attractive as inflation and taxes rise
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- Figure 4: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, January 2007-January 2010
Competitive Context
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- Key points
- Direct competition comes from workplace pensions
- Number of occupational pensions down a fifth since 2004
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- Figure 5: Number of private sector occupational pension schemes in the UK, by scheme size, 2004-08
- GPPs and company stakeholder pensions
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- Figure 6: New individual pension premiums, GPPs and company-sponsored stakeholder pensions, 2005-09
- The National Employment Savings Trust (NEST)
- Non-pension alternatives
- ISAs
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- Figure 7: ISA sales, by type of ISA, 2003/04-2008/09
- Property
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- Figure 8: New buy-to-let mortgage business, 2003-09
Swot
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- Figure 9: Market for personal and stakeholder pensions – SWOT analysis, 2010
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Who’s Innovating?
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- Key points
- Personal and stakeholder pension innovation is hard to come by
- More firms launching pension ads targeting younger consumers
- Aviva pensions TV ad campaign
- Standard Life creates ‘Reality Check’ ad campaign
- Pru asking consumers how confident they are in their pensions
- The Standard Life ‘active money personal pension’
- Scottish Life simplifies Pension Portfolio personal pension product
Market Size and Forecast
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- Key points
- New business levels down significantly in 2009
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- Figure 10: New individual personal pension and stakeholder pension premiums, 2005-09
- Stakeholder pensions losing their lustre
- Slowdown in transfers a factor behind decline in new business levels
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- Figure 11: Single-premium transfer business, individual personal pensions and stakeholder pensions, 2006-09
- Marginal growth in the number of policies in force
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- Figure 12: Total number of policies and regular premiums in force, individual personal pensions and stakeholder pensions, 2004-08
- Forecast
- Back to growth in 2011
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- Figure 13: Forecast of new APE* premiums into individual personal pensions, 2004-14
- More focus on personal pensions likely going forward
- Factors used in the forecast
Market Share
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- Key points
- Aviva overtakes Lloyds at the top of the table
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- Figure 14: Ranking of individual pension providers, based on UK gross written premium, 2007 and 2008
- Firms outside the top 20 find it difficult to compete
- Many top providers also active in the occupational pensions market
Companies and Products
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- Major players
- AEGON Scottish Equitable
- Aviva plc
- AXA (AXA Life)
- Legal & General
- Lloyds TSB (Scottish Widows)
Brand Communication and Promotion
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- Key points
- Personal pension adspend more than doubles in the year to December 2009
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- Figure 15: Pensions advertising expenditure, by sub-category, 2007-09
- Four fifths of all pension-related adspend goes through top ten advertisers
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- Figure 16: Advertising expenditure by the top ten pensions advertisers, 2008 and 2009
- Specialist press publications main form of advertising media used
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- Figure 17: Overview of media type used to advertise pensions-related products, 2009
Channels to Market
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- Key points
- Intermediaries play a key role in distribution
- Personal pensions
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- Figure 18: Proportional distribution of new APE* premiums into personal pensions, by distribution channel, 2005-09
- Individual stakeholder pensions
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- Figure 19: Proportional distribution of new APE* premiums into individual stakeholder pensions, by distribution channel, 2005-09
The Consumer – Pension Ownership
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- Key points
- One in ten non-retired adults own a personal pension
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- Figure 20: Ownership of saving and investment products, December 2009
- Opportunities to encourage supplemental pension savings
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- Figure 21: Cross-analysis of ownership of saving and investment products, December 2009
- Personal pension ownership jumps after age 35
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- Figure 22: Ownership of saving and investment products, by age, December 2009
- Saving for a pension should be a top priority for younger people
- Personal pension ownership rises with income level and status
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- Figure 23: Ownership of saving and investment products, by socio-economic group, December 2009
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- Figure 24: Ownership of saving and investment products, by gross annual household income, December 2009
The Consumer – Attitudes towards Pensions
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- Key points
- Over a third agree that pensions are the best way to save for retirement...
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- Figure 25: Attitudes towards pensions, December 2009
- …but only two in five believe it is essential to save for retirement
- Attitudes towards pensions and product ownership
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- Figure 26: Attitudes towards pension, by most popular ownership of saving and investment products, December 2009
- Awareness of the need to save for retirement improves after 25
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- Figure 27: Attitudes towards pension, by gender and age, December 2009
- ABC1s most clued up when it comes to retirement planning
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- Figure 28: Attitudes towards pension, by socio-economic status, December 2009
- Greater earnings typically lead to greater engagement
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- Figure 29: Attitudes towards pension, by gross annual household income, December 2009
- Those banking online more likely to be thinking of saving for retirement
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- Figure 30: Attitudes towards pension, by web use, December 2009
The Consumer – Confidence in Retirement Savings
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- Key points
- Very few see a comfortable retirement as a sure thing
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- Figure 31: Confidence that personal savings will provide a comfortable retirement, December 2009
- Confidence in a comfortable retirement and product ownership
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- Figure 32: Confidence that personal savings will provide a comfortable retirement, by ownership of select saving and investment products, December 2009
- Those aged 45-54 least likely to be confident in their prospects in retirement
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- Figure 33: Confidence that personal savings will provide a comfortable retirement, by gender, age, lifestage, marital status and region, December 2009
- The earlier one starts saving, the more confident one will be
- Tax relief should be promoted heavily
- Homeowners and high earners most likely to be confident
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- Figure 34: Confidence that personal savings will provide a comfortable retirement, by socio-economic status, working status, gross annual household income and housing tenure, December 2009
- Those banking online and reading broadsheets most bullish about their prospects
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- Figure 35: Confidence that personal savings will provide a comfortable retirement, by newspaper readership, internet usage frequency and web use, December 2009
The Consumer – Targeting Opportunities
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- Key points
- Key target groups
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- Figure 36: Key pension target groups, December 2009
- Passive pension believers
- Non-committal
- Pension devotees
- Pension sceptics
- Prefer property
- Target groups by product ownership
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- Figure 37: Ownership of saving and investment products, by target groups, December 2009
- Target groups: Confidence savings will provide a comfortable retirement
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- Figure 38: Confidence that personal savings will provide a comfortable retirement, by target groups, December 2009
Appendix – Market Background and Definitions
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- Pension-based retirement planning
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- Figure 39: Types of private pension provision in the UK, 2010
- Occupational schemes
- Individual pensions
- Group pensions
- Benefit structures
- Alternatively secured pensions
- Other definitions
- A-day
Appendix – Broader Market Environment
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- Figure 40: Trends in the age structure of the UK population, by gender, 2004-14
- Figure 41: Projected size of the UK population, by age band, 2008-58
- Figure 42: Average gross weekly income of pensioner units*, by age, 2008/09
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- Figure 43: UK economic activity among people of pension age, by gender, 2002-08
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Appendix – The Consumer – Pension Ownership
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- Figure 44: Ownership of saving and investment products, by demographics, December 2009
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Appendix – The Consumer – Attitudes towards Pensions
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- Figure 45: Attitudes towards pensions, by demographics, December 2009
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- Figure 46: Attitudes towards pensions, by demographics, December 2009 (continued)
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Appendix – The Consumer – Confidence in Retirement Savings
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- Figure 47: Confidence that personal savings will provide a comfortable retirement, December 2009
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- Figure 48: Confidence that personal savings will provide a comfortable retirement, by demographics, December 2009
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Appendix – The Consumer – Targeting Opportunities
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- Figure 49: Attitudes towards pensions, by target groups, December 2009
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- Figure 50: Target groups, by demographics, December 2009
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