With an ageing population, increasing longevity, extensive media coverage regarding pensions and the savings gap, a relatively low base interest rate encouraging spending, a strong distrust of financial services companies and the phasing out of final salary pensions, the drivers underlying the pensions market are complex. The rules that currently govern the pensions system are especially complicated, and it is argued that they might actually discourage investment in pensions.

A-Day Overview:

With an ageing population, increasing longevity, extensive media coverage regarding pensions and the savings gap, a relatively low base interest rate encouraging spending, a strong distrust of financial services companies and the phasing out of final salary pensions, the drivers underlying the pensions market are complex. The rules that currently govern the pensions system are especially complicated, and it is argued that they might actually discourage investment in pensions.

On 6 April 2006, also known as A-day, a new set of pensions rules will come into effect, replacing the eight sets of rules that currently govern the UK’s pensions system. These new rules will ‘simplify’ the system by establishing a single tax regime, and it is widely believed that the new rules will give consumers greater choice when investing in pensions, which will ultimately increase sales of pensions.

Indeed, consumers will have more flexibility with how they save into a pension, how much they save into a pension and how the benefits are drawn at retirement.

The goal of this report is to assess the impact of A-day. After outlining the key changes that take place on A-day, this report identifies the key drivers of the individual pensions market, evaluating how these factors are likely to affect the pensions market in the future. The size of the pensions market is presented and broken down by product, while sales trends are identified and examined. The report then highlights the key pensions providers, as well as the leading IFAs in terms of pension-related turnover, later focusing on distribution trends. Advertising activity, the impact of the media and overall consumer financial activity are also taken into consideration.

Central to the theme of this report is Mintel’s exclusive consumer research. An initial sample of 2,014 adults aged 16+ were questioned about pension ownership, their attitudes towards pensions and the factors that would encourage them to save more in a pension. The research also assessed their knowledge of the upcoming changes, and gauged their opinion of some of the proposals put forth by the Pension Commission’s report (also known as the Turner report). The results are presented in analysed in two separate sections of the report.