2022
9
UK Annuities and Income Drawdown Market Report 2022
2022-11-22T03:07:38+00:00
OX1100519
2195
157820
[{"name":"Pensions","url":"https:\/\/store.mintel.com\/industries\/finance\/financial-services\/pensions"}]
Report
en_GB
“The market for retirement income products has bounced back from the pandemic-induced dip, and the outlook is positive, supported by an increasing pool of potential customers. Rising annuity rates and…

UK Annuities and Income Drawdown Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Annuities and Income Drawdown Market Report examines consumers’ behaviours and attitudes towards retirement income products, ownership of pensions and the impact of the inflationary pressures on the income drawdown and annuity market. This report covers the UK retirement income market size, market forecast, market segmentation and trends in the UK retirement income market

 

UK Income Drawdown and Annuity Market Landscape

Both income drawdown and annuity market sales volumes have bounced back after declining in 2020 and will continue to grow in 2022. Annuity market rates have improved, while the desire for a secure income will underpin growth. However, income drawdown remains the preferred option, and the flexibility offered will continue to support further growth in this segment.

 

UK Retirement Income Market Size and Industry Statistics

Mintel’s annuities and income drawdown market report forecasts that long-term inflation could erode the value of pension pots. This, combined with economic uncertainty, could lead to a more cautious approach, and some of those nearing retirement may opt to postpone retirement altogether.

  • Annuity market size: Sales in the annuity market have bounced back and increased by 10% in 2021.
  • Retirement income market size: Mintel estimates that sales of drawdown products will rise by 8% in 2022.
  • 68% of Brits have a workplace pension, 21% have never had a pension.
  • 68% of adults with a DC pension say they worry about the impact of inflation on the value of their pension pots.

 

Future Retirement Income Market Trends

Mintel’s retirement income market research indicates that the long-term outlook for income drawdown and annuity market is positive. Economic conditions should normalise, moving beyond the pandemic and inflationary pressures. In addition, as the UK population continues to age, there is an increasing pool of potential customers for the retirement income market to target.

To discover more about the UK Annuities and Income Drawdown Market Report 2022, read our UK Personal Pensions Market Report 2022, or take a look at our Financial Services Market Research Reports.

 

Quickly Understand

  • Income drawdown and annuities market performance, including five-year market forecasts.
  • Ownership of pensions and interest in decumulation expectations at retirement.
  • Outlines what consumers consider to be important features of different retirement income products.
  • Examines behaviours and attitudes towards the retirement income market.
  • Examines the annuity market size and retirement income market statistics.

 

Covered in this Report

Brands: Aviva, Legal & General, Canada Life, Just Group, Scottish Widows.

Products: Retirement income solutions aimed at defined contribution pension savers.

 

Expert Analysis from a Specialist in the Financial Sector

This report, written by Stefania Apostol, a leading analyst in the financial sector, delivers in-depth commentary and analysis to highlight current trends in the retirement income market and add expert context to the numbers.

The retirement income market has bounced back from the pandemic-induced dip, and the outlook is positive, supported by an increasing pool of potential customers. Rising annuity rates and the desire for a secure income are likely to make this option more attractive. However, consumers continue to value the flexibility of drawdown arrangements, and this remains the most popular option. While pension savers are concerned about the impact of inflation on their pension pots, the cost of living crisis could drive more to access their retirement funds to cope with rising prices.”

Stefania Apostol - Financial Services Analyst

Stefania Apostol
Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
    • Types of pension annuity
    • Intermediary definitions
  2. Executive Summary

    • The five-year outlook for annuities and income drawdown products
      • Figure 1: Category outlook, 2022-27
    • The market
    • Annuity sales bounce back and are forecast to remain positive…
      • Figure 2: Market forecast for annuity sales, 2017-27
    • …but drawdown remains the preferred option for retirement income
      • Figure 3: Market forecast for drawdown sales, 2017-27
    • The vast majority of annuities are sold without advice
      • Figure 4: Annuity sales, by sales channels (ABI members only), 2014-21
    • Advised drawdown sales continue to decline
      • Figure 5: Use of advice when entering drawdown, 2018/19-2021/22
    • The number of pension pots accessed for the first time rises by 18%
      • Figure 6: Number of pension pots accessed for the first time, 2019/20- 2021/22
    • Companies and brands
    • The annuity market is highly concentrated…
      • Figure 7: New annuity* business, by providers active in the open market, 2020/21
    • …while the drawdown market is more diverse
    • Blended solutions remain limited
    • The consumer
    • 79% of adults have pension savings
      • Figure 8: Pension ownership among UK adults, 2021-22
    • More than half of over-55s with a DC pension have accessed a pot
      • Figure 9: Pension access by DC pension savers aged 55+, 2022
    • Drawdown is the preferred option among those who haven’t accessed their savings
      • Figure 10: Decumulation expectations, by age, 2022
    • Turbulent times highlight the benefit of a guaranteed income…
    • …but flexibility is also important
      • Figure 11: Most important features of a retirement income product, by age, 2022
    • A third of DC pension savers expect to use a professional adviser
      • Figure 12: Information sources for retirement products, by age, 2022
    • Pension savers worry about the impact of inflation
      • Figure 13: Behaviours and attitudes towards retirement, 2022
  3. Issues and Insights

    • Rising inflation worries pension savers
    • The retirement income market would benefit from more innovation and simplicity
  4. Market Size and Performance

    • Annuity sales bounce back…
      • Figure 14: Number of new pension annuity and drawdown sales (ABI members only), 2015-22
    • … but drawdown remains the preferred option for retirement income
      • Figure 15: Number of new drawdown sales – comparison of ABI and FCA data, 2015-22
      • Figure 16: Number of new drawdown sales – comparison of ABI and FCA data, 2014-22
    • Value of annuity premiums starts to recover
      • Figure 17: Value of new annuity and income drawdown premiums (ABI members only), 2015-21
  5. Market Forecast

    • The outlook for annuities and income drawdown products
      • Figure 18: Category outlook, 2022-27
    • Volume sales of annuities are forecast to remain positive
      • Figure 19: Market forecast for annuity sales, 2017-27
      • Figure 20: Market forecast for annuity sales, 2017-27
    • Drawdown volume is expected to grow over the next five years
      • Figure 21: Market forecast for drawdown sales, 2017-27
      • Figure 22: Market forecast for drawdown sales, 2017-27
    • Learnings from the last income squeeze
      • Figure 23: Number of new pension annuity sales, 2007-21
    • Forecast methodology
  6. Market Segmentation

    • Joint life and guaranteed period annuities continue to fall out of favour…
    • …while enhanced annuities account for 46% of sales
      • Figure 24: Annuity sales, by product type, 2020-21
  7. Channels to Market

    • External annuity sales continue to rise
      • Figure 25: Annuity and drawdown – internal versus external sales (ABI members only), 2018-21
      • Figure 26: Proportional distribution of internal versus external annuity sales (ABI members only), 2018-21
    • The vast majority of annuities are sold without advice
      • Figure 27: Annuity sales, by sales channels (ABI members only), 2014-21
    • More than half of drawdowns are sold to existing customers
      • Figure 28: Source of business when entering drawdown, 2018-22
    • Advised drawdown sales continue to decline
      • Figure 29: Use of advice when entering drawdown, 2018/19-2021/22
    • Pension Wise use is still not widespread
      • Figure 30: Number of DC pension pots accessed for the first time, by use of advice or guidance, 2021/22
  8. Market Drivers

    • Pension participation reaches 79%
      • Figure 31: Proportion of employees with workplace pension, by type of pension, 1997-2021
    • The number of pension pots accessed for the first time rises by 18%
      • Figure 32: Number of DC pension pots accessed for the first time, by usage, 2019/20-2021/22
    • Annuities will become more attractive as rates rise
      • Figure 33: Monthly average yield from British government securities, 20-year and 10-year nominal par yield, 2000-22
    • UK’s population is greying
      • Figure 34: UK population, by age, 2020-50
    • People are staying in the workforce for longer
      • Figure 35: Average age of exit from the labour market, by gender, 2000-22
    • Consumers face inflationary pressure…
      • Figure 36: CPI, 12-month rates, 2016-22
    • …and most people are feeling the effects of price rises
      • Figure 37: Issues faced in the last two months, 2022
    • The cost of living crisis will impact retirement savings
  9. Regulatory and Legislative Changes

    • Over-55s to receive a stronger nudge towards Pension Wise
    • Government suspends triple lock for 2022/23
    • Pensions dashboards to launch in 2023
    • New pension scheme to be introduced in the UK
  10. Key Providers

    • The annuity market is highly concentrated
    • Recent sales performance of the largest annuity providers
    • Aviva
    • Legal & General
    • Just Group
    • Scottish Widows
    • Canada Life
      • Figure 38: New annuity* business, by providers active in the open market, 2020/21
    • The drawdown market is more diverse
  11. Competitive Strategies

    • The annuity market is short on innovation
    • Scottish Widows launches the ‘Annuity Bureau’
    • Aviva Financial Advice introduces a whole-of-market advice model
    • Drawdown providers focus on improving the customer journey
    • Blended solutions remain limited
  12. Pension Ownership

    • 79% of adults have pension savings
      • Figure 39: Pension ownership among UK adults, 2021-22
    • Full-time workers are more likely to have a workplace pension
      • Figure 40: Pension ownership among UK adults, by working status, 2022
    • 34% of those with a workplace pension have a DB scheme…
      • Figure 41: Type of workplace pension owned, 2022
    • Defined contribution pensions are the most common
      • Figure 42: Type of pension owned – all pension savers, 2022
  13. Pension Access

    • More than half of over-55s with a DC pension have accessed a pot
      • Figure 43: Pension access by DC pension savers aged 55+, 2022
    • Almost half of those who accessed their DC pension bought an annuity…
    • …and more than a third took one or more partial cash sums
      • Figure 44: Type of pension access, 2022
  14. Decumulation Expectations

    • Drawdown is the preferred option
      • Figure 45: Decumulation expectations, 2022
    • Over-55s are less likely to withdraw the entire amount in one go
      • Figure 46: Decumulation expectations, by age, 2022
    • Women are less likely to know what to do with their pension savings
      • Figure 47: Adults with a DC pension who haven’t accessed it and don’t know what they will do, by age and gender, 2022
  15. Most Important Product Features

    • Turbulent times highlight the benefit of a guaranteed income…
    • …but flexibility is also important
      • Figure 48: Most important features of a retirement income product, by age, 2022
    • A combination of features can reach the majority of target customers
      • Figure 49: Important features of a retirement income product – TURF analysis, 2022
  16. Information Sources for Retirement Income Products

    • A third of DC pension savers expect to use a professional adviser
      • Figure 50: Information sources for retirement products, 2022
    • Pension Wise has higher interest among those nearing retirement
      • Figure 51: Pension Wise as an information source for retirement products, by age, 2022
    • Generation X would benefit from more support
      • Figure 52: Information sources for retirement products, by generations, 2022
  17. Behaviours and Attitudes towards Retirement

    • Pension savers worry about the impact of inflation
    • Retirement income products are seen as confusing
      • Figure 53: Behaviours and attitudes towards retirement, 2022
    • Blended products have strong appeal
      • Figure 54: Interest in a blended product, by decumulation expectations, 2022
  18. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • TURF analysis methodology
  19. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 55: Volume sales of annuities, 2017-27
      • Figure 56: Volume sales of drawdown plans, 2017-27
    • Market drivers and assumptions
    • Forecast methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

Below is a sample report, understand what you are buying.

Click to show report
2024 Sample Consumer Cover

Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted. Our reports are available to download in PDF and PPT formats.

Trusted by companies. Big and small.

Want to speak to us directly?

Contact us with your enquiry and our expert global team can help.

Get in touch