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

Personal and Stakeholder Pensions - UK - March 2011

With a third consecutive year of decline in new business levels, the personal and individual stakeholder pension markets continued to face difficulties in 2010. Although the financial crisis has encouraged people to take saving more seriously, the pension industry has seen little benefit from this trend. For the most part continued economic uncertainty has undermined people’s ability, or willingness, to focus on longer-term savings goals, instead concentrating on shorter-term savings, such as building an emergency fund.

These segments of the individual pension market are being faced with longer term challenges as well. While the decline in the quality of private sector, and now public sector, workplace pension schemes should in theory boost demand for private pension arrangement, widespread consumer apathy, unawareness and confusion continue to prevent the market from reaching its full potential. The government, also aware of this problem, will launch a national low cost workplace pension scheme called the National Employment Savings Trust (NEST) from April 2012. The introduction of this scheme could potentially make life even more difficult for personal and in particular individual stakeholder providers.

There are still some positives. Consumer research data has indicated a promising level of engagement in pension savings among people aged between 18 and 34. This could increase exponentially with the launch of NEST. Although the scheme will be a serious competitor, it will also be a powerful force in raising awareness about the need to save for retirement. In the long-term this could translate into more demand for individual pension products as people gain a greater understanding of the level of savings required to ensure a comfortable retirement.

This report focuses specifically on the personal and individual stakeholder pension segments of the pension industry. In addition to presenting detailed information on new and existing business levels, trends in product distribution, and market advertising spend, the report presents an overview of the key internal, economic and regulatory factors impacting the market. The final sections of the report provide the reader with the key findings of Mintel’s exclusively commissioned in depth consumer research on pensions.

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

          • The market
            • Figure 1: Forecast of new individual personal pension and stakeholder pension APE* premiums combined, 2005-15
          • Transfer business still highly influential
            • Individual stakeholder sales split evenly between IFAs and tied agents
              • Market factors
                • Economic uncertainty deterring long-term savings activity
                  • Some longer-term trends more favourable than others
                    • Internal market environment
                      • Significant regulatory developments
                        • Companies, brands and innovation
                          • Led by Lloyds market share highly concentrated at the top
                            • General pension advertising rose strongly in 2010
                              • Competitive context
                                • The consumer
                                  • Consumer pension ownership
                                    • Figure 2: Ownership of saving and investment products, by age, January 2011
                                  • Consumer attitudes towards pensions
                                    • Consumer awareness and behaviour
                                      • Consumer pension saving patterns
                                        • Confidence in retirement prospects
                                          • Figure 3: Confidence that personal savings will provide a comfortable retirement, January 2011
                                        • What we think?
                                        • Issues in the Market

                                            • What is holding the personal and individual stakeholder markets back?
                                              • What kind of impact will the launch of NEST have on the market?
                                                • What do consumers think about saving in a pension?
                                                  • How can providers encourage more young people to save in a pension?
                                                    • Is the target market likely to be wowed by investment choice?
                                                    • Future Opportunities

                                                      • Pension provider knows best
                                                        • What to expect from your pension: There’s a pension app for that
                                                        • Internal Market Environment

                                                          • Key points
                                                            • Decline in workplace pension benefits widening the savings gap
                                                              • Market weighed down by apathy, confusion and unawareness
                                                                • Launch of NEST could hurt new business prospects…
                                                                  • …but there will still be a need for independent pension arrangements
                                                                    • Regulatory and legislative development
                                                                      • Major changes in pension legislation from April 2011
                                                                        • Annuity purchase will become an option not an obligation
                                                                          • The end of mandatory retirement
                                                                            • Reduction in pension contribution tax relief for high earners
                                                                              • State pension age to rise to 66 by 2020
                                                                                • Allowing early access to pension funds under consideration
                                                                                • Broader Market Environment

                                                                                  • Key points
                                                                                    • Economic uncertainty prompts financial prudence…
                                                                                      • Figure 4: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                                                                    • …but saving will be challenging for many in 2011
                                                                                      • Figure 5: Monthly change in RPI and average weekly earnings, 2005-10
                                                                                    • Increasing longevity makes saving for retirement even more important
                                                                                      • Figure 6: Cohort life expectancy at age 60, by gender, 1981-2058
                                                                                    • Implications of improving longevity need to be made clear
                                                                                      • Stockmarket performance has improved but remains highly volatile
                                                                                        • Figure 7: FTSE 100 and FTSE All Share – daily index movements, December 2004-December 2010
                                                                                      • Decline in annuity rates makes saving in a pension less attractive
                                                                                      • Competitive Context

                                                                                        • Key points
                                                                                          • Workplace-based pension schemes compete directly with individual schemes
                                                                                            • The number of occupational pensions fell by nearly a fifth in 2009
                                                                                              • Figure 8: Number of private sector occupational pension schemes in the UK, by scheme size, 2005-09
                                                                                            • Personal and stakeholder pensions may not benefit from decline
                                                                                              • GPPs and company stakeholder pensions
                                                                                                • Figure 9: New individual pension premiums, GPPs and company-sponsored stakeholder pensions, 2005-10
                                                                                              • Non-pension alternatives
                                                                                                • ISAs the key competing product
                                                                                                  • 12% rise in ISA contributions in 2009/10
                                                                                                    • Figure 10: Value of ISA sales, by type of ISA, 2004/05-2009/10
                                                                                                  • Property
                                                                                                  • SWOT Analysis

                                                                                                      • Figure 11: Market for personal and stakeholder pensions – SWOT analysis, 2011
                                                                                                  • Who’s Innovating?

                                                                                                    • Key points
                                                                                                      • Several companies add funds to fill gap in the market
                                                                                                        • Aviva
                                                                                                          • Zurich UK Life
                                                                                                            • AXA Wealth launches third-way pension products
                                                                                                              • Marketing and engaging with customers
                                                                                                                • Aviva launches pension planning iPhone app
                                                                                                                  • Standard Life launches Pension Planner alongside online pension application
                                                                                                                    • Scottish Widows sponsors London 2012
                                                                                                                    • Market Size and Forecast

                                                                                                                      • Key points
                                                                                                                        • New business levels continue to decline in 2010
                                                                                                                          • Figure 12: New individual personal pension and stakeholder pension premiums, 2005-10
                                                                                                                        • The introduction of NEST will hurt growth prospects
                                                                                                                          • Stakeholder products could be on their way out
                                                                                                                            • Transfers continue to represent a high proportion of new business
                                                                                                                              • Figure 13: Single-premium transfer business, individual personal pensions and stakeholder pensions, 2006-10
                                                                                                                            • Total number of policies and regular premiums in force
                                                                                                                              • Figure 14: Total number of policies and regular premiums in force, individual personal pensions and stakeholder pensions, 2005-09
                                                                                                                            • Forecast
                                                                                                                              • An uncertain future
                                                                                                                                • Figure 15: Forecast of new individual personal pension and stakeholder pension APE* premiums combined, 2005-15
                                                                                                                              • Forecast methodology
                                                                                                                              • Market Share

                                                                                                                                • Key points
                                                                                                                                  • Led by Lloyds Banking Group the top five increase their grip on the market
                                                                                                                                    • Figure 16: Ranking of individual pension providers, based on UK gross written premium, 2008 and 2009
                                                                                                                                  • Less than 3% of all new business generated by those outside the top 20
                                                                                                                                  • Companies and Products

                                                                                                                                    • Key players
                                                                                                                                      • Aviva
                                                                                                                                          • Figure 17: Present value of new business premiums, 2008-09 and H1 2009-H1 2010
                                                                                                                                        • Lloyds TSB
                                                                                                                                            • Figure 18: Present value of new business premiums, 2008-09 and H1 2009-H1 2010
                                                                                                                                          • Legal & General
                                                                                                                                              • Figure 19: New business premiums (APE), 2008-09 and H1 2009-H1 2010
                                                                                                                                            • AXA
                                                                                                                                              • AEGON
                                                                                                                                              • Brand Communication and Promotion

                                                                                                                                                • Key points
                                                                                                                                                  • Pensions advertising expenditure up by three fifths in 2010
                                                                                                                                                    • Figure 20: Pensions advertising expenditure, by sub-category, 2008-10*
                                                                                                                                                  • Aviva and Scottish Widows responsible for nearly half of all adspend
                                                                                                                                                    • Figure 21: Advertising expenditure by the top ten pensions advertisers, 2009 and 2010*
                                                                                                                                                  • Press the main type of advertising media type used
                                                                                                                                                    • Figure 22: Overview of media type used to advertise pensions-related products, 2010*
                                                                                                                                                  • Note about NMR data
                                                                                                                                                  • Channels to Market

                                                                                                                                                    • Key points
                                                                                                                                                      • Majority of new pensions generated by intermediaries
                                                                                                                                                        • Personal pensions
                                                                                                                                                          • Figure 23: Proportional distribution of new APE* premiums into personal pensions, by distribution channel, 2005-10
                                                                                                                                                        • Individual stakeholder pensions
                                                                                                                                                          • Figure 24: Proportional distribution of new APE* premiums into individual stakeholder pensions, by distribution channel, 2005-10
                                                                                                                                                      • Consumer Pension Ownership

                                                                                                                                                        • Key points
                                                                                                                                                          • One in eight report owning a personal or stakeholder pension
                                                                                                                                                            • Figure 25: Ownership of saving and investment products, January 2011
                                                                                                                                                          • Shifting existing savings into a pension
                                                                                                                                                            • Figure 26: Cross-analysis of ownership of saving and investment products, January 2011
                                                                                                                                                          • Personal pension ownership peaks after 45 years of age
                                                                                                                                                            • Figure 27: Ownership of saving and investment products, by age, January 2011
                                                                                                                                                          • Highlighting the long-term benefits of pension tax relief
                                                                                                                                                            • Personal pension ownership among low to middle income earners
                                                                                                                                                              • Figure 28: Ownership of saving and investment products, by socio-economic group, January 2011
                                                                                                                                                              • Figure 29: Ownership of saving and investment products, by gross annual household income, January 2011
                                                                                                                                                          • Consumer Attitudes Towards Pensions

                                                                                                                                                            • Key points
                                                                                                                                                              • Half agree that pensions are the best way to save for retirement
                                                                                                                                                                • Figure 30: Attitudes towards pensions, January 2011
                                                                                                                                                              • Nearly a third admit they do not know how pensions work
                                                                                                                                                                • When it comes to choice of investment – Keep, keeping it simple
                                                                                                                                                                  • Figure 31: Agreement with attitudes towards pensions, by ownership of saving and investment products, January 2011
                                                                                                                                                                • Younger consumers have more positive views of pensions
                                                                                                                                                                  • Figure 32: Agreement with attitudes towards pensions, by gender and age, January 2011
                                                                                                                                                                • Positive sentiment most likely to be displayed by the affluent
                                                                                                                                                                  • Figure 33: Agreement with attitudes towards pensions, by socio-economic group, January 2011
                                                                                                                                                                  • Figure 34: Agreement with attitudes towards pensions, by gross annual household income, January 2011
                                                                                                                                                              • Consumer Awareness and Behaviour

                                                                                                                                                                • Key points
                                                                                                                                                                  • Many are unaware of how much they should be saving in a pension
                                                                                                                                                                    • Figure 35: Pension saving behaviour, January 2011
                                                                                                                                                                  • Two in five say they are regularly monitoring their pension
                                                                                                                                                                    • The influence of gender and age
                                                                                                                                                                      • Figure 36: Agreement with statements on pension saving behaviour, by gender, age and marital status, January 2011
                                                                                                                                                                    • Level of engagement among younger consumers is promising
                                                                                                                                                                      • Income more indicative of engagement than socio-economic status
                                                                                                                                                                        • Figure 37: Agreement with statements on pension saving behaviour, by socio-economic group and gross annual household income, January 2011
                                                                                                                                                                      • Internet users display an above-average level of engagement
                                                                                                                                                                        • Figure 38: Agreement with statements on pension saving behaviour, by media usage, January 2011
                                                                                                                                                                    • Pension Saving Levels

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Majority contributing between £50 and £200 a month
                                                                                                                                                                          • Figure 39: The value of monthly pension contributions, by type of pension, January 2011
                                                                                                                                                                        • Active engagement leads to higher contribution levels
                                                                                                                                                                          • Figure 40: The value of monthly pension contributions, by agreement with statements on pension saving behaviour, January 2011
                                                                                                                                                                        • Technological innovation is already helping to improve engagement
                                                                                                                                                                          • More than two fifths of 18-34-year-olds paying in at least £100 per month
                                                                                                                                                                            • Figure 41: The value of monthly pension contributions, by demographics, January 2011
                                                                                                                                                                          • An opportunity to get more younger people saving in pensions
                                                                                                                                                                            • Over a third or high earners contributing in excess of £200 a month
                                                                                                                                                                              • Figure 42: The value of monthly pension contributions, by demographics, January 2011
                                                                                                                                                                          • Confidence in Retirement Prospects

                                                                                                                                                                            • Key points
                                                                                                                                                                              • Two in five personal pension owners positive about retirement prospects
                                                                                                                                                                                • Figure 43: Confidence that personal savings will provide a comfortable retirement, January 2011
                                                                                                                                                                              • Owners of workplace-based schemes tend to be more confident…
                                                                                                                                                                                • Figure 44: Confidence that personal savings will provide a comfortable retirement, by ownership of select saving and investment products, January 2011
                                                                                                                                                                              • …but this could change as quality of schemes declines
                                                                                                                                                                                • Indication a minority may have unrealistic expectations
                                                                                                                                                                                  • Figure 45: The value of monthly pension contributions, by confidence that personal savings will provide a comfortable retirement, January 2011
                                                                                                                                                                                • Savers need more firm guidance about how much they should be saving
                                                                                                                                                                                  • Figure 46: Confidence that personal savings will provide a comfortable retirement, by agreement with statements about pension saving behaviour, January 2011
                                                                                                                                                                                • Nearly half of those aged between 35 and 54 not at all confident
                                                                                                                                                                                  • Figure 47: Confidence that personal savings will provide a comfortable retirement, by demographics, January 2011
                                                                                                                                                                                • Savings habit needs to be engrained at an early age
                                                                                                                                                                                  • Confidence rises in line with affluence
                                                                                                                                                                                    • Figure 48: Confidence that personal savings will provide a comfortable retirement, by demographics, January 2011
                                                                                                                                                                                  • Media and technology usage reflective of financial savvy
                                                                                                                                                                                    • Figure 49: Confidence that personal savings will provide a comfortable retirement, by media usage, January 2011
                                                                                                                                                                                • Consumer Targeting Opportunities

                                                                                                                                                                                  • Key points
                                                                                                                                                                                    • Key target groups
                                                                                                                                                                                      • Figure 50: Key pension target groups, January 2011
                                                                                                                                                                                    • Pension positive
                                                                                                                                                                                      • Demographic highlights
                                                                                                                                                                                        • Pension unschooled
                                                                                                                                                                                          • Demographic highlights
                                                                                                                                                                                            • Pension hesitant
                                                                                                                                                                                              • Demographic highlights
                                                                                                                                                                                                • Pensions part of the mix
                                                                                                                                                                                                  • Demographic highlights
                                                                                                                                                                                                    • Product ownership levels in line with target group attitudes
                                                                                                                                                                                                      • Figure 51: Ownership of saving and investment products, by target groups, January 2011
                                                                                                                                                                                                    • Target groups and confidence in retirement prospects
                                                                                                                                                                                                      • Figure 52: Confidence that personal savings will provide a comfortable retirement, by target groups, January 2011
                                                                                                                                                                                                  • Appendix – Market Size

                                                                                                                                                                                                      • Figure 53: Forecast of new individual personal pension and stakeholder pension APE* premiums combined, 2005-15
                                                                                                                                                                                                  • Appendix – Consumer Pension Ownership

                                                                                                                                                                                                      • Figure 54: Ownership of saving and investment products, by age, January 2011
                                                                                                                                                                                                  • Appendix – Consumer Attitudes Towards Pensions

                                                                                                                                                                                                      • Figure 55: Disagreement with attitudes towards pensions, by ownership of saving and investment products, January 2011
                                                                                                                                                                                                  • Appendix – Consumer Awareness and Behaviour

                                                                                                                                                                                                      • Figure 56: Agreement with statements on pension saving behaviour, by type of pension, January 2011
                                                                                                                                                                                                      • Figure 57: Disagreement with statements on pension saving behaviour, by type of pension, January 2011
                                                                                                                                                                                                      • Figure 58: Agreement with pension saving behaviour, by demographics, January 2011
                                                                                                                                                                                                      • Figure 59: Disagreement with pension saving behaviour, by demographics, January 2011
                                                                                                                                                                                                  • Appendix – Consumer Pension Saving Patterns

                                                                                                                                                                                                      • Figure 60: Value of monthly pension contributions, by agreement with statements on pension saving behaviour, January 2011
                                                                                                                                                                                                      • Figure 61: Value of monthly pension contributions, by disagreement with statements on pension saving behaviour, January 2011
                                                                                                                                                                                                      • Figure 62: Value of monthly pension contributions, by demographics, January 2011
                                                                                                                                                                                                  • Appendix – Confidence in Retirement Prospects

                                                                                                                                                                                                      • Figure 63: Confidence that personal savings will provide a comfortable retirement, January 2011
                                                                                                                                                                                                      • Figure 64: Confidence that personal savings will provide a comfortable retirement, by demographics, January 2011
                                                                                                                                                                                                  • Appendix – Consumer Targeting Opportunities

                                                                                                                                                                                                      • Figure 65: Agreement with attitudes towards pensions, by target groups, January 2011
                                                                                                                                                                                                      • Figure 66: Disagreement with attitudes towards pensions, by target groups, January 2011
                                                                                                                                                                                                      • Figure 67: Agreement and disagreement with statements on pension saving behaviour, by target groups, January 2011
                                                                                                                                                                                                      • Figure 68: Value of monthly pension contributions, by target groups, January 2011
                                                                                                                                                                                                      • Figure 69: Key pension target groups, by demographics, January 2011

                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                  • Aegon UK
                                                                                                                                                                                                  • Association of British Insurers
                                                                                                                                                                                                  • Aviva Plc
                                                                                                                                                                                                  • AXA UK plc
                                                                                                                                                                                                  • AXA Wealth
                                                                                                                                                                                                  • Bank of England
                                                                                                                                                                                                  • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                                                                                  • Chartered Institute of Personnel and Development [CIPD]
                                                                                                                                                                                                  • Co-operative Group
                                                                                                                                                                                                  • Council of Mortgage Lenders
                                                                                                                                                                                                  • Deutsche Bank AG
                                                                                                                                                                                                  • Fidelity Investment Services Limited
                                                                                                                                                                                                  • Financial Services Authority (The)
                                                                                                                                                                                                  • Government Actuary's Department (GAD)
                                                                                                                                                                                                  • Hargreaves Lansdown Plc
                                                                                                                                                                                                  • HBOS plc (Halifax Bank of Scotland)
                                                                                                                                                                                                  • Hewitt Associates
                                                                                                                                                                                                  • HM Revenue & Customs
                                                                                                                                                                                                  • HSBC Holdings plc
                                                                                                                                                                                                  • HSBC Private Bank (UK) Limited
                                                                                                                                                                                                  • Institute of Financial Planning
                                                                                                                                                                                                  • Lloyds Banking Group
                                                                                                                                                                                                  • Marks & Spencer
                                                                                                                                                                                                  • Royal Bank of Scotland Group plc
                                                                                                                                                                                                  • Royal London Mutual Insurance Society
                                                                                                                                                                                                  • Scottish Widows Bank plc
                                                                                                                                                                                                  • Virgin Media Ltd
                                                                                                                                                                                                  • Virgin Mobile
                                                                                                                                                                                                  • Wm Morrison Supermarkets
                                                                                                                                                                                                  • Zurich Financial Services

                                                                                                                                                                                                  Personal and Stakeholder Pensions - UK - March 2011

                                                                                                                                                                                                  £1,995.00 (Excl.Tax)