Personal and Stakeholder Pensions - UK - March 2009
After several years of solid growth the personal pension market, along with most of the financial services industry, has experienced a slowdown in 2008. Naturally, the current economic environment is a major contributing factor to the recent slowdown. Many people are focusing on more immediate issues such as paying down debt or preparing for the prospect of unemployment, rather than saving for retirement. Other more persistent issues, however, such as negative publicity, frequent regulatory changes, as well as consumer apathy or a preference for alternative investments, have also been holding the market back.
On the other hand, although near term prospects remain challenging, longer term economic and demographic trends are much more favourable for the personal pension industry. The UK population is ageing rapidly and considerable improvements in longevity mean that people will increasingly be spending more time in retirement. Furthermore, just as people are finding they will need to save more money to ensure a comfortable retirement, there has been a progressive decline in both state and occupational pension provision. As a result, more of the burden of saving for retirement has been placed on the individuals themselves – which means demand for personal pension products should rise over the long term.
This report presents an overview of the key issues facing the individual personal pension market in the UK. In addition to examining the wider economic, demographic and regulatory environment, the report details the value of new business and takes a look at the competitive landscape. The report also highlights market strengths and weaknesses and identifies potential market opportunities and threats. The final section of the report presents the findings of Mintel’s exclusive consumer research survey. Here the reader is provided with valuable insight into the attitudes and behaviours of UK consumers towards personal pensions.
Difficult economic conditions have hurt demand for individual pension products in the past year.
Lack of affordability, as well as unawareness, apathy and distrust of pension’s industry are additional factors currently holding the market back.
Some consumers prefer to save for retirement outside of a pension.
The launch of Personal Accounts in 2012 poses a competitive threat at the lower end of the market.
Products such as SIPPs are difficult for consumers to understand and only appeal to a narrow slice of the population.
The RDR as well as the TCF initiative are likely to have an impact on future pension product design and could make selling personal pensions more difficult in the near term.
Longer term demographic and social trends are encouraging (i.e. a gradually older and more affluent population, declining occupational and state pension provision, increased job mobility).
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