Sorry for interrupting, this website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Learn more
Accept & Close

Consumers and Pension Auto-Enrolment - UK - September 2013

“The true test of auto-enrolment is how SMEs handle the administration of schemes as they approach their staging dates. There are expectations that opt-out rates will be higher amongst these smaller employers, and that the employers themselves will be ill prepared to deal with the implementation of the scheme.”

– Stephanie Absolom, Financial Services Analyst

Some questions answered in this report include:

  • Will the success of auto-enrolment continue as smaller companies reach their staging date?
  • How can the number of people opting-out be managed?
  • How can providers maintain engagement and keep people enrolled?
  • Are we likely to see compulsory auto-enrolment in the future?

What you get

What's included

Why buy from us?

Succeed

Our reports will provide you with market data, consumer research and competitive intelligence to succeed in your market.

Instant Access

Buy now and you'll have instant access to the information you need to make the right decisions.

Opportunities

Find out what's next in the markets that matter to you: where opportunities lie and what challenges you will face.

Trusted

A business Superbrand, Mintel is a source you can trust. We have been defining and refining the Market Intelligence mix since 1972.

Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • Consumers and workplace pensions
            • Two thirds of workers have access to a company pension
              • Figure 1: Consumers and company pensions, July 2013
            • Pension market overview
              • New insurer administered occupational pension business struggling
                • New GPP business grew in 2012
                  • Personal and stakeholder pensions set to suffer further
                    • Market factors
                      • October 2012 saw the start of auto-enrolment
                        • Early figures indicate that the scheme has got off to a good start
                          • The Pensions Regulator is taking a firm approach in assuring compliance
                            • Increased longevity is part of the justification for auto-enrolment
                              • Ban on consultancy charging
                                • ABI members set to disclose fees and charges upfront
                                  • Clause in the pensions bill could see small firms exempted from auto-enrolment
                                    • Intermediaries prepare for a busy phase of auto-enrolment
                                      • Market consolidation is expected in the coming years
                                        • The consumer
                                          • Auto-enrolment will help to address the gap in private sector pension provision
                                            • Figure 2: Type of employer, July 2013
                                          • Awareness of auto-enrolment is high among employees
                                            • Figure 3: Awareness of pension auto-enrolment, July 2013
                                          • Less than a fifth plan to opt-out
                                            • Figure 4: Likelihood of opting-out of auto-enrolment, July 2013
                                          • Affordability will be the main driver of opt-outs
                                            • Figure 5: Reasons for opting-out of auto-enrolment, July 2013
                                          • Transferable pensions are attractive
                                            • Figure 6: Workplace pension preferences, July 2013
                                          • Employees crave employers support around pension saving
                                            • Figure 7: Views about pension auto-enrolment, July 2013
                                          • What we think
                                          • Issues in the Market

                                              • Will the success of auto-enrolment continue as smaller companies reach their staging date?
                                                • How can the number of people opting-out be managed?
                                                  • How can providers maintain engagement and keep people enrolled?
                                                    • Are we likely to see compulsory auto-enrolment in the future?
                                                    • Trend Application

                                                        • Auto-enrolment complexities require a considered approach from employers
                                                          • Decline of deference 33% better ways to save
                                                            • Technology will change the way that workers engage with their pensions
                                                            • Market Drivers

                                                              • Key points
                                                                • Auto-enrolment is up and running
                                                                  • DWP research shows that opt-out rates are 9%
                                                                    • Early stats and figures are encouraging
                                                                      • SMEs will mainly rely on NEST
                                                                        • But some companies are missing their staging dates
                                                                          • The implementation of auto-enrolment will rely on support functions
                                                                            • Increased longevity has driven the need for pension reform
                                                                              • Figure 8: Life expectancy at 65, 1981-2058
                                                                            • An ageing population is set to put pressure on government finances
                                                                              • Figure 9: Projected size of the UK population, by age band, 2012-56
                                                                            • MPs have called for a new regulator to regulate workplace pensions
                                                                              • ABI members set to disclose workplace pension fees upfront
                                                                              • Auto-Enrolment – Employers and IFAs

                                                                                • Key points
                                                                                  • Auto-enrolment is putting employers under a lot of strain
                                                                                    • Concerns around smaller firms ability to cope with auto-enrolment
                                                                                      • Potential for small firms to be exempted from auto-enrolment
                                                                                        • DWP bans consultancy charging
                                                                                          • Managing costs is a concern for firms set to implement auto-enrolment
                                                                                            • Auto-enrolment is changing the benefit strategy in many firms
                                                                                              • Figure 10: Issues shaping benefit strategy of those responsible for compensation and benefits in their organisation, 2013
                                                                                            • ABI launches tool to help employers manage costs
                                                                                              • Intermediaries expecting an upturn in auto-enrolment related business
                                                                                              • SWOT Analysis

                                                                                                  • Figure 11: SWOT Analysis
                                                                                              • Auto- Enrolment and Pension Providers

                                                                                                • Consolidation expected amongst auto-enrolment providers
                                                                                                  • NEST
                                                                                                    • Key facts and charges
                                                                                                      • Recent activity
                                                                                                        • B&CE – The People’s Pension
                                                                                                          • Key facts and charges
                                                                                                            • NOW: Pensions
                                                                                                              • Key facts and charges
                                                                                                                • Recent activity
                                                                                                                  • Selected other providers
                                                                                                                    • Standard Life
                                                                                                                      • Recent auto-enrolment activity
                                                                                                                        • Aviva
                                                                                                                          • Recent auto-enrolment activity
                                                                                                                            • AEGON
                                                                                                                              • Recent auto-enrolment activity
                                                                                                                              • Pension Market Overview

                                                                                                                                • Key points
                                                                                                                                  • New insurer-administered occupation pension business struggles in 2012
                                                                                                                                    • Figure 12: New insurer-administered occupational pension business (volume and value), 2007-12
                                                                                                                                  • DC membership and premiums will grow through auto-enrolment
                                                                                                                                    • Figure 13: Insurer-administered occupational pension business in force, 2007-11
                                                                                                                                  • Growth in new GPP business will continue as auto-enrolment is implemented
                                                                                                                                    • Figure 14: New GPP business, 2007-12
                                                                                                                                  • Personal and individual stakeholder pensions show no signs of improvement
                                                                                                                                    • Figure 15: New personal pension and individual stakeholder pension business, 2008-12
                                                                                                                                • Consumer Financial Confidence

                                                                                                                                  • Key points
                                                                                                                                    • The majority of consumers are generally positive about their finances
                                                                                                                                      • Figure 16: Current financial situation, July 2013
                                                                                                                                    • Consumers are cautious about the year ahead
                                                                                                                                      • Figure 17: Consumer sentiment, July 2010-13
                                                                                                                                    • Cautious consumers could be more open to pension saving
                                                                                                                                    • Types of Employer

                                                                                                                                      • Key points
                                                                                                                                        • Three quarters of employees work in the private sector
                                                                                                                                          • Figure 18: Type of employer, July 2013
                                                                                                                                        • Larger employers better positioned to adapt to auto-enrolment
                                                                                                                                          • The strain of implementing auto-enrolment will be felt by SMEs
                                                                                                                                          • Pension Landscape – Consumer Participation in Workplace Pensions

                                                                                                                                            • Key points
                                                                                                                                              • Two thirds of employees have access to a company pension scheme
                                                                                                                                                • Figure 19: Access to a company pension scheme, July 2013
                                                                                                                                              • Lower and middle income earners will benefit from auto-enrolment
                                                                                                                                                • Figure 20: Access to a company pension scheme, by annual household income, July 2013
                                                                                                                                              • Where company pension schemes exist, uptake it high
                                                                                                                                                • Figure 21: Membership of company pension schemes, July 2013
                                                                                                                                              • 92% of employers contribute to their company pension schemes
                                                                                                                                                • Figure 22: Employer contributions to company pension schemes, July 2013
                                                                                                                                              • Most employee scheme members contribute to their workplace pension
                                                                                                                                                • Figure 23: Employees who make personal contributions to a company pension scheme, July 2013
                                                                                                                                              • Confusion exists between existing and new auto-enrolment workplace schemes
                                                                                                                                                • Figure 24: Impact of auto-enrolment on the availability of company pension schemes, July 2013
                                                                                                                                              • Auto-enrolment will mean big changes for small private sector firms
                                                                                                                                                • Figure 25: Consumers and company pensions, by type of employer, July 2013
                                                                                                                                            • Auto-Enrolment Awareness and Opt-out Rates

                                                                                                                                              • Key points
                                                                                                                                                • Three quarters of employees are aware of pension auto-enrolment
                                                                                                                                                  • Figure 26: Awareness of pension auto-enrolment, July 2013
                                                                                                                                                  • Figure 27: Awareness of pension auto-enrolment, by annual household income July 2013
                                                                                                                                                • Just under a fifth of employees think they may opt-out of auto-enrolment
                                                                                                                                                  • Figure 28: Likelihood of opting-out of auto-enrolment, July 2013
                                                                                                                                                • Likelihood of opting-out falls in the last year
                                                                                                                                                  • Awareness of auto-enrolment is not a big factor for workers choosing to opt-out
                                                                                                                                                    • Figure 29: Likelihood of opting-out of auto-enrolment, by Awareness of pension auto-enrolment, July 2013
                                                                                                                                                  • Employees in smaller firms are more likely to opt-out of auto-enrolment
                                                                                                                                                    • Figure 30: Likelihood of opting-out of auto-enrolment, by type of employer, July 2013
                                                                                                                                                  • Auto-enrolment targets need the most convincing to stay in the scheme
                                                                                                                                                    • Figure 31: Likelihood of opting-out of auto-enrolment, by annual household income, July 2013
                                                                                                                                                • Reasons for Opting-out of Auto-Enrolment

                                                                                                                                                  • Key points
                                                                                                                                                    • Affordability will be the main driver of opt-outs
                                                                                                                                                      • Figure 32: Reasons for opting-out of auto-enrolment, July 2013
                                                                                                                                                    • Lack of pension understanding could drive up opt-out rates
                                                                                                                                                      • Women are more likely to opt-out because of affordability
                                                                                                                                                        • Figure 33: Opting-out of auto-enrolment because of affordability, by gender, July 2013
                                                                                                                                                    • Consumer Workplace Pension Preferences

                                                                                                                                                      • Key points
                                                                                                                                                        • Transferable pensions are attractive to workers
                                                                                                                                                          • Figure 34: Workplace pension preferences, July 2013
                                                                                                                                                        • Employees value their non-pension workplace benefits
                                                                                                                                                        • Views about Workplace Pensions

                                                                                                                                                          • Key points
                                                                                                                                                            • Employer support with pension options is important to employees
                                                                                                                                                              • Figure 35: Views about pension auto-enrolment, July 2013
                                                                                                                                                            • Workers appreciate the financial security that pensions offer
                                                                                                                                                              • Pension apathy affects some 22% of workers
                                                                                                                                                                • Distrustful employees more likely to make alternative pension savings arrangements
                                                                                                                                                                  • Figure 36: Reasons for opting-out of auto-enrolment, by agreement with the statement ‘I do not trust that my pension savings will/would be invested wisely’, July 2013
                                                                                                                                                                • Workers with other financial priorities can’t afford pension contributions
                                                                                                                                                                  • Figure 37: Reasons for opting-out of auto-enrolment, by agreement with the statement ‘Saving for retirement is not a financial priority for me’, July 2013
                                                                                                                                                              • Targeting Opportunities

                                                                                                                                                                • Key points
                                                                                                                                                                  • Pension Champions make up the biggest target group
                                                                                                                                                                    • Figure 38: Targeting opportunities, July 2013
                                                                                                                                                                  • Pension Champions
                                                                                                                                                                    • Pension Sceptics
                                                                                                                                                                      • Opinionated but Apathetic
                                                                                                                                                                        • Cost is the main opt-out reason for the Opinionated but Apathetic
                                                                                                                                                                          • Figure 39: Reasons for opting-out of auto-enrolment, by target groups, July 2013
                                                                                                                                                                      • Appendix – Overview of Pension Auto-Enrolment

                                                                                                                                                                        • Pension auto-enrolment in brief
                                                                                                                                                                          • The basics and who qualifies
                                                                                                                                                                            • Minimum contribution levels
                                                                                                                                                                              • Figure 40: Minimum auto-enrolment employer and employee contribution levels, by date of enforcement
                                                                                                                                                                            • Staging dates
                                                                                                                                                                              • Figure 41: Auto-enrolment staging dates, by PAYE scheme size
                                                                                                                                                                          • Appendix – Types of Employer

                                                                                                                                                                              • Figure 42: Type of employer, by demographics, July 2013
                                                                                                                                                                          • Appendix – Pension Landscape – Consumer Participation in Workplace Pensions

                                                                                                                                                                              • Figure 43: Consumers and company pensions, July 2013
                                                                                                                                                                              • Figure 44: Consumers and company pensions – Have access to a company pension scheme, by demographics, July 2013
                                                                                                                                                                              • Figure 45: Consumers and company pensions – Member of that pension scheme, by demographics, July 2013
                                                                                                                                                                              • Figure 46: Consumers and company pensions – Employer currently contributing money to that company pension scheme, by demographics, July 2013
                                                                                                                                                                              • Figure 47: Consumers and company pensions – Personally contributing money to that company pension scheme, by demographics, July 2013
                                                                                                                                                                              • Figure 48: Consumers and company pensions – Employer offer you access to this scheme as a result of auto-enrolment, by demographics, July 2013
                                                                                                                                                                          • Appendix – Auto Enrolment Awareness and Opt-out Rates

                                                                                                                                                                              • Figure 49: Awareness of pension auto-enrolment, by demographics, July 2013
                                                                                                                                                                              • Figure 50: Most popular likelihood of opting-out of auto-enrolment, by demographics, July 2013
                                                                                                                                                                              • Figure 51: Next most popular likelihood of opting-out of auto-enrolment, by demographics, July 2013
                                                                                                                                                                          • Appendix – Reasons for Opting-out of Auto-Enrolment

                                                                                                                                                                              • Figure 52: Most popular reasons for opting-out of auto-enrolment, by demographics, July 2013
                                                                                                                                                                          • Appendix – Consumer Workplace Pension Preferences

                                                                                                                                                                              • Figure 53: Workplace pension preferences– The ability to transfer my pension to a new employer if I change jobs, by demographics, July 2013
                                                                                                                                                                              • Figure 54: Workplace pension preferences– Access to information about the value of my retirement fund, at any time, by demographics, July 2013
                                                                                                                                                                              • Figure 55: Workplace pension preferences– Receiving information about how my pension fund is performing, by demographics, July 2013
                                                                                                                                                                              • Figure 56: Workplace pension preferences – Receiving information about how my pension fund is invested, by demographics, July 2013
                                                                                                                                                                              • Figure 57: Workplace pension preferences – The ability to put my pension contributions on hold with no penalty for doing so, by demographics, July 2013
                                                                                                                                                                              • Figure 58: Workplace pension preferences – The option to sacrifice other workplace benefits from my employer in favour of employer contributions to my pension, by demographics, July 2013
                                                                                                                                                                          • Appendix – Views about Workplace Pensions

                                                                                                                                                                              • Figure 59: Agreement with the statement ‘Employers should take responsibility for helping their workers understand their pension options’, by demographics, July 2013
                                                                                                                                                                              • Figure 60: Agreement with the statement ‘I do/would feel more financially secure having a workplace pension’, by demographics, July 2013
                                                                                                                                                                              • Figure 61: Agreement with the statement ‘Without contributions from my employer I do not think I would be able to save enough for my retirement’, by demographics, July 2013
                                                                                                                                                                              • Figure 62: Agreement with the statement ‘I want to have more control over saving for my retirement income’, by demographics, July 2013
                                                                                                                                                                              • Figure 63: Agreement with the statement ‘The government should make it compulsory for people in employment to save for a pension’, by demographics, July 2013
                                                                                                                                                                              • Figure 64: Agreement with the statement ‘I do not trust that my pension savings will/would be invested wisely’, by demographics, July 2013
                                                                                                                                                                              • Figure 65: Agreement with the statement ‘I feel there are better ways to save for retirement than through a workplace pension’, by demographics, July 2013
                                                                                                                                                                              • Figure 66: Agreement with the statement ‘Saving for retirement is not a financial priority for me’, by demographics, July 2013
                                                                                                                                                                              • Figure 67: Agreement with the statement ‘I cannot be bothered to think about my pension at the moment’, by demographics, July 2013
                                                                                                                                                                              • Figure 68: Access to a company pension scheme, by agreement with the statement ‘I feel there are better ways to save for retirement than through a workplace pension’, July 2013
                                                                                                                                                                              • Figure 69: Access to a company pension scheme, by agreement with the statement ‘Without contributions from my employer I do not think I would be able to save enough for my retirement’, July 2013
                                                                                                                                                                              • Figure 70: Access to a company pension scheme, by agreement with the statement ‘The government should make it compulsory for people in employment to save for a pension’, July 2013
                                                                                                                                                                              • Figure 71: Access to a company pension scheme, by agreement with the statement ‘I do/would feel more financially secure having a workplace pension’, July 2013
                                                                                                                                                                          • Appendix – Targeting Opportunities

                                                                                                                                                                              • Figure 72: Views about pension auto-enrolment, by target groups, July 2013
                                                                                                                                                                              • Figure 73: Target groups, by demographics, July 2013

                                                                                                                                                                          Companies Covered

                                                                                                                                                                          • Aegon UK
                                                                                                                                                                          • Aviva Plc
                                                                                                                                                                          • BlackRock, Inc.
                                                                                                                                                                          • Standard Life Assurance Company

                                                                                                                                                                          Consumers and Pension Auto-Enrolment - UK - September 2013

                                                                                                                                                                          £1,995.00 (Excl.Tax)