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Description

Description

Covered in this report

Following the introduction of the pension freedoms in 2015, new individual pension business, fuelled by pension transfers, increased dramatically until 2017. However, since then DB transfer business has fallen, due in part to increased regulation, which has had a significant impact across the market, particularly for SIPPs. There has also been a decline in the average individual contribution to personal pensions, particularly among the selfemployed.

Non-advised sales have increased, with improved platform technology driving the growing number of D2C SIPPs on the market. Multiple pension ownership is increasing, creating more demand and opportunity for consolidation within an individual pension scheme. The eventual implementation of the Pensions Dashboard will also help to drive this activity.

“A combination of increased reliance on workplace pensions and declining transfer business has had a negative effect upon the individual pensions market. Nevertheless, the increase in non-advised business is positive, and reflects the changing nature of the market with growth in the number of D2C providers and options. By focusing on Gen-Xers, who are the most likely to be unengaged with their pensions, and the self-employed, the market can return to growth.”

– Douglas Kitchen, Financial Services Analyst

This report examines the following issues:

  • Innovation and flexibility needed to drive ownership among the self-employed
  • Providers cannot rely on wake-up packs to attract Gen-Xers

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • New premium income falls for the second year in a row…
              • …and is set to continue its decline
                • Figure 1: Forecast of new individual pension business – fan chart, 2014-24
              • SIPP sales also fall for the second consecutive year
                • Figure 2: Number of regulated SIPP, personal pension and stakeholder pension sales, 2015-19
              • Non-advised sales the best-performing channel…
                • Average individual pension contributions fell in 2017/18
                  • Figure 3: Personal and stakeholder pension annual contributions, 2013/14-2017/18
                • …while the self-employed continue to remain unengaged
                  • Figure 4: Number of self-employed personal and stakeholder pension members and total contributions, 2013/14-2017/18
                • New wake-up packs enter the market
                  • Companies and brands
                    • Royal London retains top spot
                      • A fall in DB transfers hits the larger SIPP providers
                        • AJ Bell prioritises advised customers
                          • Penfold focuses on the self-employed
                            • The consumer
                              • Confusion around pension ownership
                                • Figure 5: Type of pension owned, September 2019
                              • Almost half of workplace pension savers are not saving anywhere else
                                • Individual pension holders expect to turn to financial advice
                                  • Figure 6: Agreement with attitudes towards pensions and retirement planning, by pension ownership, September 2019
                                • Just 6% intend to open an individual pension
                                  • Figure 7: Agreement with attitudes towards pensions and future retirement plans, by pension ownership, September 2019
                                • Converting interest into ownership is a challenge
                                  • Individual pension holders are more engaged
                                    • Clarity and transparency are key factors
                                      • Figure 8: Important factors among owners of individual pensions, September 2019
                                    • What we think
                                    • Issues and Insights

                                      • Innovation and flexibility needed to drive ownership among the self-employed
                                        • The facts
                                          • The Implications
                                            • Providers cannot rely on wake-up packs to attract Gen-Xers
                                              • The facts
                                                • The implications
                                                • The Market – What You Need to Know

                                                  • New single-premium income falls for the second year in a row…
                                                    • …driven by a decline in single-premium personal pensions
                                                      • SIPP sales also fall for the second consecutive year
                                                        • Non-advised sales the best-performing channel
                                                          • Average individual pension contributions fell in 2017/18…
                                                            • …while the self-employed continue to remain unengaged
                                                              • New wake-up packs enter the market
                                                              • Market Size and Forecast

                                                                • Slight fall in the number of in-force individual pensions in 2018
                                                                  • Figure 9: Individual pension business in force, by product type, 2018
                                                                • SIPPs account for 34% of the non-workplace pensions market
                                                                  • New single-premium income set to fall for the second consecutive year
                                                                    • Figure 10: New individual pension business, 2015-19
                                                                  • New individual pension business to continue to decline
                                                                    • Figure 11: Forecast of new individual pension business – fan chart, 2014-24
                                                                    • Figure 12: Forecast of new individual pension business, 2014-24
                                                                  • Forecast methodology
                                                                  • Market Segmentation

                                                                    • New single-premium pensions set to fall by 20%
                                                                      • Stakeholder pensions continue their decline
                                                                        • Figure 13: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2015-19
                                                                        • Figure 14: Value of new individual personal pension, stakeholder pension and insured SIPP sales, 2015-19
                                                                      • SIPP sales decline for the second year running, but still dwarf other individual pensions market
                                                                        • Figure 15: Number of regulated SIPP, personal pension and stakeholder pension sales, 2015-19
                                                                      • Regulatory scrutiny has hampered pension transfers
                                                                        • Figure 16: Transfers as a share of new individual pension business, by product type, 2015-18
                                                                    • Channels to Market

                                                                      • Non-advised sales increase across the board…
                                                                        • …with SIPPs the main beneficiary
                                                                          • Sharp decline in adviser sales for personal and stakeholder pensions
                                                                            • Figure 17: New individual personal pension business, by sales channel, 2015-18
                                                                            • Figure 18: New individual stakeholder pension business, by sales channel, 2015-18
                                                                            • Figure 19: New individual insured SIPP business, by sales channel, 2015-18
                                                                        • Market Drivers

                                                                          • Auto-enrolment drives increased workplace pension membership
                                                                            • Figure 20: Membership of occupational pension schemes, by membership type, UK, 2008-18
                                                                          • Employers drive increased personal pension contributions
                                                                            • Figure 21: Personal and stakeholder pension annual contributions, 2013/14-2017/18
                                                                          • Self-employed personal pension members and contributions fall
                                                                            • Figure 22: Number of self-employed personal and stakeholder pension members and total contributions, 2013/14-2017/18
                                                                        • Regulatory and Legislative Environment

                                                                          • The Pension Schemes Bill is introduced
                                                                            • With a focus on the Pensions Dashboard…
                                                                              • …and tackling pension transfer fraud
                                                                                • Attention turns to improving the advice and speed of transfers
                                                                                  • Through the FCA…
                                                                                    • …and industry bodies
                                                                                      • Wake-up pack revamp could increase engagement…
                                                                                        • …while the DWP prioritises the self-employed
                                                                                        • Companies and Brands – What You Need to Know

                                                                                          • Royal London retains top spot
                                                                                            • A fall in DB transfers hits the larger SIPP providers
                                                                                              • AJ Bell prioritises advised customers
                                                                                                • New D2C products enter the market
                                                                                                  • Penfold focuses on the self-employed
                                                                                                  • Provider Rankings

                                                                                                    • Royal London retains top spot
                                                                                                      • Figure 23: Rankings of top 10 providers of insurance-administered individual and group pension business, by total gross premium income, 2017 and 2018
                                                                                                    • Decrease in DB transfers affects larger SIPP providers
                                                                                                    • Competitive Strategies

                                                                                                      • Established brands focus on improving engagement
                                                                                                        • Lloyds and Scottish Widows
                                                                                                          • L&G’s own Pensions Dashboard
                                                                                                            • AJ Bell focusses on the advised market
                                                                                                              • LV= unveils a new range of ESG funds
                                                                                                                • New D2C products become more commonplace
                                                                                                                  • Through Fintech apps…
                                                                                                                    • …and D2C investment platforms
                                                                                                                      • New digital-only provider Penfold focuses on the self-employed
                                                                                                                      • The Consumer – What You Need to Know

                                                                                                                        • Confusion around pension ownership
                                                                                                                          • Almost half of workplace pension savers are not saving anywhere else
                                                                                                                            • Individual pension holders expect to turn to financial advice
                                                                                                                              • Just 6% intend to open an individual pension
                                                                                                                                • Converting interest into ownership is a challenge
                                                                                                                                  • Individual pension holders are more engaged
                                                                                                                                    • Clarity and transparency are key factors
                                                                                                                                    • Pension Ownership

                                                                                                                                      • Three quarters own a pension…
                                                                                                                                        • …but there is confusion around type of pension held
                                                                                                                                          • Significant scope for greater targeting of the self-employed
                                                                                                                                            • Figure 24: Type of pension owned, September 2019
                                                                                                                                          • Most individual pension holders own more than one pot
                                                                                                                                            • Figure 25: Number of pension pots owned, by pension ownership, September 2019
                                                                                                                                        • Other Retirement Savings

                                                                                                                                          • 48% are relying on their workplace pension
                                                                                                                                            • Figure 26: Other retirement savings methods, by pension ownership, September 2019
                                                                                                                                          • Convincing existing investors should be a key focus
                                                                                                                                            • Figure 27: Other retirement savings methods, by financial situation, September 2019
                                                                                                                                        • Attitudes towards Pensions and Retirement Planning

                                                                                                                                          • Individual pension holders are more confident about pensions…
                                                                                                                                            • Figure 28: Agreement with attitudes towards pensions, by pension ownership, September 2019
                                                                                                                                          • …and are more likely to seek financial advice about their pension
                                                                                                                                            • Millennials have good intentions but need help
                                                                                                                                              • Figure 29: Agreement with attitudes towards pensions and retirement planning, by pension ownership, September 2019
                                                                                                                                          • Future Retirement Plans

                                                                                                                                            • Just 6% plan on opening an individual pension within the next two years
                                                                                                                                              • Millennials show more enthusiasm…
                                                                                                                                                • …but Gen-Xers need to be convinced
                                                                                                                                                  • Figure 30: Agreement with attitudes towards pensions and future retirement plans, by pension ownership, September 2019
                                                                                                                                                • Converting interest to ownership among the self-employed will be key
                                                                                                                                                  • Figure 31: Agreement with attitudes towards pensions and future retirement plans, by employment status, September 2019
                                                                                                                                                • Individual pensions not a front-of-mind retirement planning solution
                                                                                                                                                  • Figure 32: Agreement with attitudes towards pensions and future retirement plans, by response to the statement ‘I am currently planning for retirement’, September 2019
                                                                                                                                              • Pension Engagement

                                                                                                                                                • Personal pension holders are more engaged
                                                                                                                                                    • Figure 33: Pension engagement, by pension ownership, September 2019
                                                                                                                                                  • Pension engagement split between online and offline methods
                                                                                                                                                    • Figure 34: Channels used to check on the value of a pension, by pension engagement, September 2019
                                                                                                                                                • Individual Pensions: Most Important Factors

                                                                                                                                                  • Clarity is the most important factor for individual pension holders
                                                                                                                                                    • Convenience is also a priority
                                                                                                                                                      • Figure 35: Important factors among owners of individual pensions, September 2019
                                                                                                                                                    • Scope for greater product development across the market…
                                                                                                                                                      • …but there are significant obstacles when it comes to ethical investments
                                                                                                                                                        • Members who prioritise convenience save for retirement in many ways
                                                                                                                                                          • Figure 36: Other retirement savings methods, by important factors among owners of individual pensions, September 2019
                                                                                                                                                        • Established brands have a distinct advantage
                                                                                                                                                          • Figure 37: TURF Analysis – Important factors among owners of individual pensions, September 2019
                                                                                                                                                      • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                          • Abbreviations
                                                                                                                                                            • Consumer research methodology
                                                                                                                                                              • Turf analysis methodology
                                                                                                                                                                • Figure 38: Table – TURF Analysis – personal pensions and SIPPs, September 2019
                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                              • Total market forecast – best- and worst-case scenarios
                                                                                                                                                                • Figure 39: Forecast of individual pension premiums, best- and worst-case scenarios, 2019-24
                                                                                                                                                              • Individual personal and stakeholder pension business – Regular premiums
                                                                                                                                                                • Figure 40: Forecast of new regular-premium individual personal and stakeholder pension business – fan chart 2014-24
                                                                                                                                                                • Figure 41: Forecast of regular-premium individual pension premiums, best- and worst-case scenarios, 2019-24
                                                                                                                                                              • Individual personal and stakeholder pension business – Single premiums
                                                                                                                                                                • Figure 42: Forecast of new single-premium individual personal and stakeholder pension business – fan chart 2014-24
                                                                                                                                                                • Figure 43: Forecast of single-premium individual pension premiums, best- and worst-case scenarios, 2019-24
                                                                                                                                                              • Forecast methodology

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