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

Retirement Savings Overview - UK - June 2010

  • The UK has an ageing population and a worryingly large pension savings gap due to an apathetic attitude towards retirement, particularly amongst younger adults, who have other priorities like getting onto the housing ladder and who generally regard retirement as being too far away for them to worry about.
  • The closure of final-salary pension schemes in the private sector has further exacerbated the situation, as the defined contribution schemes that have replaced them are typically less generous.
  • In response to the widespread lack of adequate retirement saving, the government is launching an auto-enrolment national pension scheme called the National Employment Savings Trust (NEST) in 2012, which will help the situation and should significantly increase levels of pension participation.
  • New individual personal and stakeholder pension APE premiums fell by 25% in 2009, from £1.71 billion in 2008 to £1.29 billion last year, due to higher unemployment, a rise in business failures, and squeezed disposable incomes putting downward pressure on savings activity.
  • The majority of UK consumers are ill prepared for retirement – less than two fifths of non-retired adults have a pension and only a fifth have stock market-based investments.
  • High earners, particularly those earning £40,000+, are considerably more likely to have a pension, with ownership levels at over two thirds of individuals.
  • The majority of non-retired people are fairly optimistic about their expected lifestyle during retirement, with a third of individuals thinking they should be able to get by and a fifth expecting a comfortable standard of living when they retire.
  • Young adults are more likely to say they’d rather live for today than worry about the future (around a third of 18-34-year-olds) and are much more concerned about getting onto or moving up the housing ladder rather than saving for retirement, which is understandable given the difficulties in the housing market at present.

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. Issues in the Market

      • Key issues
        • Report scope
          • Abbreviations
          • Future Opportunities

            • How much longer can SKIing continue?
              • Swapping pensions for housing equity withdrawal
              • Market in Brief

                • Around two fifths of non-retired adults have a pension
                  • Figure 1: Ownership of savings, investment and pension products, March 2010
                • Fighting apathy among the young
                  • Figure 2: Financial expectations during retirement, March 2010
                • Affordability and apathy are the main barriers to saving in a pension
                  • Figure 3: Reasons for not having a pension, March 2010
                • The desire to leave a legacy remains strong
                  • Figure 4: Attitudes towards retirement and retirement planning in general, March 2010
                • The retirement savings challenge
                  • Alternatives to saving in a pension
                    • Economic conditions have improved significantly
                      • Pension contributions have fallen during the recession
                        • Figure 5: New individual personal and stakeholder pension premiums, 2005-09
                      • Alternative retirement savings markets have also suffered
                      • Influencing Factors and Market Dynamics

                        • Key points
                          • General trends
                            • An ageing population puts increased pressure on the state pension…
                              • Figure 6: Trends in the age structure of the UK population, 2005-15
                            • …forcing many people to postpone or work during their retirement
                              • The recession has widened the savings gap
                                • Pension-related trends
                                  • The continued closure of final-salary pension schemes
                                    • Figure 7: Proportion of active members in private sector defined-benefit occupational pension schemes, by scheme status, 2007 and 2008
                                  • Recent tax changes may discourage pension saving at the top end
                                    • Hints of greater flexibility for personal pensions…
                                      • …and a simplification of company schemes
                                        • Pension participation will increase under the NEST
                                          • The RDR will impact product design and distribution
                                            • The negative public perception of pension companies
                                              • Non-pension product trends
                                                • ISAs are the main alternative to a pension
                                                  • Other alternatives to saving in a pension
                                                    • Equity release firms have been heavily criticised in the past
                                                      • The FSA has called for the regulation of BTL mortgages
                                                      • Investing Climate

                                                        • Key points
                                                          • The UK emerges from recession but the economy remains fragile
                                                            • Figure 8: Quarterly percentage change in GDP, Q1 2004-Q4 2009
                                                          • Long-term growth in PDI should boost retirement savings
                                                            • Figure 9: PDI, consumer expenditure and savings, at current prices, 2005-10
                                                          • House prices have also recovered…
                                                            • Figure 10: Average UK house prices, Nationwide and Halifax indices (nominal/not seasonally adjusted), Q1 2000-Q4 2009
                                                          • …which is bad news for potential first-time buyers…
                                                            • Figure 11: Household tenure in England, by number of households and proportion of total households, 1961-2008
                                                          • …but is good news for buy-to-let investors
                                                            • Figure 12: Average annual rate of return on a rental proprty investment, Q1 2006-Q3 2009
                                                          • Stockmarket gains have increased the appeal of equities
                                                            • Figure 13: FTSE 100 index (daily closing prices), April 2000-April 2009
                                                        • Consumer Context

                                                          • Key points
                                                            • Consumer confidence has increased significantly…
                                                              • Figure 14: Monthly, three-monthly and 12-monthly UK consumer confidence indices, January 1988-March 2010
                                                            • …with more households now saving
                                                              • Figure 15: Households’ financial position, Q1 2009-Q1 2010
                                                            • Pension saving intentions have also risen considerably
                                                              • Figure 16: Intended life and pensions* activity, Q3/Q4 2002-Q1/Q2 2010
                                                            • Saving for the long term is a higher priority for people in 2010
                                                                • Figure 17: Financial priorities over the previous year and coming year, November 2009
                                                              • Two fifths of people expect taxes to rise this year
                                                                  • Figure 18: Expectations of macroeconomic changes, November 2009
                                                              • SWOT Analysis

                                                                  • Figure 19: Retirement savings – SWOT analysis, 2010
                                                              • Market Overview

                                                                • Key points
                                                                  • Pensions
                                                                    • The decline of private sector occupational pension schemes
                                                                      • Figure 20: Number of active members of occupational pension schemes*, by sector, 1991-2008
                                                                    • Occupational schemes require high contributions to plug deficits
                                                                      • Figure 21: New insurance-administered occupational pension business, 2001-09
                                                                    • New individual pension premiums fell significantly in 2009…
                                                                      • Figure 22: New individual personal and stakeholder pension premiums, 2005-09
                                                                    • …as did new premiums into group personal pensions
                                                                      • Figure 23: New group personal pension business, 2002-09
                                                                    • Non-pension-based retirement strategies
                                                                      • The buy-to-let market has been hard hit by the credit crunch
                                                                        • Figure 24: Number and value of new BTL mortgages sold, 2004-09
                                                                      • The equity release market also contracted during the recession…
                                                                        • Figure 25: Volume and value of new equity release plan sales, 2004-09
                                                                      • …although future pensioners may be forced to use these schemes
                                                                        • ISAs have grown in popularity since their launch in 1999
                                                                          • Figure 26: Number of ISAs and amounts subscribed, by component type, 1999/2000-2008/09
                                                                        • Sales of investment funds hit an all-time high in 2009
                                                                          • Figure 27: Retail sales of unit trusts and OEICs by IMA members, 2000-09
                                                                      • The Consumer – Product Ownership

                                                                        • Key points
                                                                          • A quarter of adults don’t own any savings/investment products…
                                                                            • Figure 28: Repertoire of the number of different savings, investment and pension products owned, March 2010
                                                                          • …and less than two fifths of non-retired adults have a pension
                                                                            • Figure 29: Ownership of savings, investment and pension products, March 2010
                                                                          • The portfolio investors
                                                                            • Figure 30: Ownership of savings, investment and pension products, by sub-categories of product ownership, March 2010
                                                                          • How to turn pensions from a luxury to a necessity?
                                                                            • Figure 31: Sub-categories of product ownership, by demographics, March 2010
                                                                          • ABs have a much wider range of options available to them
                                                                            • Figure 32: Repertoire of the number of different savings, investment and pension products owned, by demographics, March 2010
                                                                        • The Consumer – Retirement Plans and Financial Expectations

                                                                          • Key points
                                                                            • Two fifths of non-retired adults plan to retire at state pension age
                                                                              • Figure 33: Planned age of retirement, March 2010
                                                                            • As they approach retirement, people may reassess their plans
                                                                              • Figure 34: Planned age of retirement, by demographics, March 2010
                                                                            • Married people are more likely to plan to retire early
                                                                              • People with a pension or investments are more likely to retire early
                                                                                • Figure 35: Sub-categories of product ownership, by planned age of retirement, March 2010
                                                                              • One in eight people think they’ll really struggle in retirement
                                                                                • Figure 36: Financial expectations during retirement, March 2010
                                                                              • Young people are less likely to have thought about retirement
                                                                                • Figure 37: Financial expectations during retirement, by demographics, March 2010
                                                                              • Reaping the rewards of a successful career
                                                                                • People with investments have higher financial expectations in retirement
                                                                                  • Figure 38: Sub-categories of product ownership, by financial expectations during retirement, March 2010
                                                                                • People who think they’ll struggle in retirement plan to work longer
                                                                                  • Figure 39: Financial expectations during retirement, by planned age of retirement, March 2010
                                                                              • The Consumer – Attitudes Towards Pensions and Reasons for Not Having One

                                                                                • Key points
                                                                                  • Pensions are still the most popular way of saving for retirement
                                                                                    • Figure 40: Attitudes towards pensions, March 2010
                                                                                  • Pension tax relief appeals more to workers and high earners
                                                                                    • Figure 41: Attitudes towards pensions, by demographics, March 2010
                                                                                  • Mortgage holders may be a key target for providers…
                                                                                    • …as are people with stock market-based investments
                                                                                      • Figure 42: Sub-categories of product ownership, by attitudes towards pensions, March 2010
                                                                                    • Will worries over retirement income prompt a pension review?
                                                                                      • Figure 43: Financial expectations during retirement, by attitudes towards pensions, March 2010
                                                                                    • Affordability is the main barrier to wider pension ownership
                                                                                      • Figure 44: Reasons for not having a pension, March 2010
                                                                                    • People who don’t trust pension companies are saving in other ways
                                                                                      • Figure 45: Reasons for not having a pension, by ownership of savings, investment and pension products, March 2010
                                                                                    • Little optimism among people who can’t afford to save
                                                                                      • Figure 46: Financial expectations during retirement, by reasons for not having a pension, March 2010
                                                                                  • The Consumer – Attitudes Towards Retirement Planning in General

                                                                                    • Key points
                                                                                      • Leaving a legacy versus living for the moment
                                                                                        • Figure 47: Attitudes towards retirement and retirement planning in general, March 2010
                                                                                      • Few people think the state pension alone will be sufficient
                                                                                        • A reluctance to use equity release
                                                                                          • Young adults are more concerned about getting onto the housing ladder
                                                                                            • Figure 48: Attitudes towards retirement and retirement planning in general, by demographics, March 2010
                                                                                          • People without children are more reliant on the state pension
                                                                                            • People with no savings, investments or pension may be in denial
                                                                                              • Figure 49: Sub-categories of product ownership, by attitudes towards retirement and retirement planning in general, March 2010
                                                                                            • Those that plan to retire at state pension age think the state will provide
                                                                                              • Figure 50: Planned retirement age, by attitudes towards retirement and retirement planning in general, March 2010
                                                                                            • People who think they’ll struggle may be dependent on others for help
                                                                                              • Figure 51: Financial expectations during retirement, by attitudes towards retirement and retirement planning in general, March 2010
                                                                                            • Economic conditions may be an excuse for apathetic people
                                                                                              • Figure 52: Attitudes towards pensions, by attitudes towards retirement and retirement planning in general, March 2010
                                                                                          • The Consumer – Target Groups

                                                                                            • Key points
                                                                                              • Three key consumer groups
                                                                                                • ABs and people in the family lifestage tend to be Legacy Lovers
                                                                                                  • Figure 53: Target groups, by demographics, March 2010
                                                                                                • The Apathetics have the lowest level of product ownership
                                                                                                  • Figure 54: Ownership of savings, investment and pension products, by target groups, March 2010
                                                                                                • Legacy Lovers are more likely to opt for a phased retirement…
                                                                                                  • Figure 55: Planned age of retirement, by target groups, March 2010
                                                                                                • …and expect a comfortable standard of living when they retire
                                                                                                  • Figure 56: Financial expectations during retirement, by target groups, March 2010
                                                                                                • Pension Advocates like the idea of saving in a pension…
                                                                                                  • Figure 57: Attitudes towards pensions, by target groups, March 2010
                                                                                                • …but they lack the conviction of their beliefs
                                                                                                  • Figure 58: Attitudes towards retirement and retirement planning in general, by target groups, March 2010
                                                                                              • Appendix: Market Background and Definitions

                                                                                                • Pension-based retirement planning
                                                                                                  • Figure 59: Types of private pension provision in the UK
                                                                                                • Occupational schemes
                                                                                                  • Individual pensions
                                                                                                    • Group pensions
                                                                                                      • Benefit structures
                                                                                                        • Non-pension-based retirement planning
                                                                                                          • ISAs
                                                                                                            • Buy-to-Let
                                                                                                              • Equity Release
                                                                                                                • Investment bonds from life offices
                                                                                                                  • Collective investments
                                                                                                                  • Appendix – The Consumer – Product Ownership

                                                                                                                      • Figure 60: Sub-categories of product ownership, by demographics, March 2010
                                                                                                                      • Figure 61: Ownership of pension products, by demographics, March 2010
                                                                                                                      • Figure 62: Repertoire of the number of different savings, investment and pension products owned, by demographics, March 2010
                                                                                                                  • Appendix – The Consumer – Retirement Plans and Financial Expectations

                                                                                                                      • Figure 63: Planned age of retirement, by demographics, March 2010
                                                                                                                      • Figure 64: Financial expectations during retirement, by demographics, March 2010
                                                                                                                  • Appendix – The Consumer – Attitudes Towards Pensions and Reasons for Not Having One

                                                                                                                      • Figure 65: Attitudes towards pensions, by demographics, March 2010 (Table 1 of 2)
                                                                                                                      • Figure 66: Attitudes towards pensions, by demographics, March 2010 (Table 2 of 2)
                                                                                                                      • Figure 67: Reasons for not having a pension, by demographics, March 2010 (Table 1 of 2)
                                                                                                                      • Figure 68: Reasons for not having a pension, by demographics, March 2010 (Table 2 of 2)
                                                                                                                  • Appendix – The Consumer – Attitudes Towards Retirement Planning in General

                                                                                                                      • Figure 69: Attitudes towards retirement and retirement planning in general, by demographics, March 2010 (Table 1 of 2)
                                                                                                                      • Figure 70: Attitudes towards retirement and retirement planning in general, by demographics, March 2010 (Table 2 of 2)
                                                                                                                  • Appendix – The Consumer – Target Groups

                                                                                                                      • Figure 71: Target groups, by demographics, March 2010

                                                                                                                  Retirement Savings Overview - UK - June 2010

                                                                                                                  US $2,914.30 (Excl.Tax)