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Description

Description

“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's included

What's included

Table of contents

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

                                                                                                                                                                          About the report

                                                                                                                                                                          This report will give you a complete 360-degree view of your market. Not only is it rooted in robust proprietary and high-quality third-party data, but our industry experts put that data into context and you’ll quickly understand:

                                                                                                                                                                          • The Consumer

                                                                                                                                                                            What They Want. Why They Want It.

                                                                                                                                                                          • The Competitors

                                                                                                                                                                            Who’s Winning. How To Stay Ahead.

                                                                                                                                                                          • The Market

                                                                                                                                                                            Size, Segments, Shares And Forecasts: How It All Adds Up.

                                                                                                                                                                          • The Innovations

                                                                                                                                                                            New Ideas. New Products. New Potential.

                                                                                                                                                                          • The Opportunities

                                                                                                                                                                            Where The White Space Is. How To Make It Yours.

                                                                                                                                                                          • The Trends

                                                                                                                                                                            What’s Shaping Demand – Today And Tomorrow.

                                                                                                                                                                          Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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