2021
9
UK Personal Pensions Market Report 2021
2021-10-15T04:10:26+01:00
OX1049475
2195
143564
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Report
en_GB
“2020 was a challenging year for the individual pension market as COVID-19-related disruption added to the difficulties already facing the sector before the pandemic. Sales have recovered in 2021 thanks…

UK Personal Pensions Market Report 2021

£ 2,195 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Personal Pensions market, including the behaviours, preferences and habits of the consumer.

The reduction in spending opportunities during COVID-19 lockdowns has led to a spike in deposits into current accounts and easy-access savings accounts. This has created a short-term window of opportunity for providers to encourage savers to improve their prospects in retirement by shifting these unexpected savings into an individual pension.

37% of all UK adults say they would be interested in taking out an individual pension product for themselves or for someone else within the next two years. Interest peaks at 56% among under-45s, highlighting the need for providers to develop products and services that appeal to the needs and wants of younger generations.

The potential for unfavourable legislative changes poses the biggest threat to the individual pension market. Workplace pension auto-enrolment and stricter regulations around DB to DC pension transfer advice have negatively impacted new business prospects.

The digitisation of personal finance is creating new opportunities for providers to engage with consumers. The planned launch of the Pensions Dashboard as well as recent product innovations that incorporate robo-investing tools and advice have the potential to expand access to individual pensions beyond the existing core group of older and more affluent consumers.

Read on to discover more details or take a look at all of our UK Finance market research.

Quickly understand

  • The impact of COVID-19 on the personal pension market, and on the management of personal pension products among those who own them.
  • The recent performance of the individual pension market and a five-year forecast of new business.
  • A ranking of the top pension providers and an overview of recent innovations and competitive strategies.
  • Ownership of individual pensions among UK consumers and the types of pensions held.
  • Level of interest in taking out a new individual pension, motivations for doing so and most important features of individual pension products.
  • Personal pension market size UK.
  • Personal pension statistics.

Covered in this report

Brands: Raindrop, PensionBee, Plum, BlackRock, Royal London, Hargreaves Lansdown, Curtis Banks, Phoenix Group, JPMorgan Chase, Lloyds Banking Group, Embark Group, Aviva, Prudential, Zurich Financial Services, Fidelity, Liverpool Victoria Financial Services (LV), ReAssure, NFU, Weleyan Assurance, Sun Life, Vitality Life Limited, Canada Life, Equitable Life, Chesnara Life, Police Mutual Forester Life, Assicurazioni Generali SpA, Scottish Widows, James Hay, abrdn, Goldman Sachs.

Expert analysis from a specialist in the field

This report, written by George Zaborowski, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

2020 was a challenging year for the individual pension market as COVID-19-related disruption added to the difficulties already facing the sector before the pandemic. Sales have recovered in 2021 thanks to a rise in household savings activity and improving consumer confidence. However, it remains to be seen if new business levels will ever return to pre-pandemic levels. Workplace pension auto-enrolment and stricter regulation of pension transfer advice have hurt demand, and there are few significant opportunities for generating pure new business outside of the self-employed.

George Zaborowski
Senior Analyst – Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on individual personal pensions
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on individual pensions, 2020-25
    • The market
    • New sales set to rebound after COVID-19 disruption…
    • …but the rise in new business is unlikely to last
      • Figure 2: COVID-19 scenario forecasts for the total value of UK new individual pension business, 2016-26
    • Influence of the IFA channel to diminish over the coming years
    • Auto-enrolment helping to push up demand for pension consolidation
    • Companies and brands
    • Royal London remains a leader in a highly concentrated market
    • Hargreaves Lansdown is the largest SIPP provider
    • Fintechs drive recent innovation
    • The consumer
    • Just over two fifths of pension owners hold an individual pension
      • Figure 3: Type of pension owned, 2021
    • Two in five check their pension at least once every six months
      • Figure 4: How often owners of individual or group personal pensions check the value of their pension, 2021
    • Fewer now say COVID has impacted their pension
      • Figure 5: Impact of COVID-19 outbreak on individual and group pensions, 2020 vs. 2021
    • Around two fifths express interest in taking out a pension in the next two years
      • Figure 6: Proportion of UK adults interested in arranging an individual pension in the next 2 years, 2021
    • Saving more for retirement the dominant reason for opening a pension
      • Figure 7: Main reasons for interest in arranging an individual pension for oneself in the next 2 years, 2021
    • A transparent fee structure vital for attracting new business
      • Figure 8: Importance of select product features if taking out a new personal pension/SIPP, 2021
  3. Issues and Insights

    • Potential benefit of the COVID-19 rise in saving deposits will be fleeting
    • Digitisation of pension advice has accelerated
  4. The Market – Key Takeaways

    • New sales set to rebound after COVID-19 disruption…
    • …but the rise in new business is unlikely to last
    • SIPP segment hardest hit by decline in transfer business
    • Influence of the IFA channel to diminish over the coming years
    • Auto-enrolment helping to push up demand for pension consolidation
  5. Market Size and Performance

    • COVID-19 has deflected attention away from individual pensions
      • Figure 9: Short-, medium- and long-term impact of COVID-19 on individual pensions, 2020-25
    • Auto-enrolment leads to decline of in-force individual pensions business
      • Figure 10: Individual pension business in force, by product type, 2019
    • New individual pensions business set to recover in 2021
      • Figure 11: New individual pensions business, 2016-21
  6. Market Forecast

    • New individual pension business to resume its long-term decline
      • Figure 12: Market size and forecast for the total value of UK new individual pension business, 2016-26
      • Figure 13: Market size and forecast for the total value of UK new individual pension business, at current and 2021 prices, 2016-26
    • Market drivers and assumptions
      • Figure 14: Key drivers affecting Mintel’s market forecast, 2015-25
    • Forecast methodology
  7. COVID-19 Scenario Performance

    • Mintel’s approach to predicting the impact of COVID-19
    • Fundamental differences in how COVID-19 is affecting consumer markets
    • COVID-19 scenario forecast for personal pensions
      • Figure 15: COVID-19 scenario forecasts for the total value of UK new individual pension business, 2016-26
    • An extended period of disruption will temporarily boost sales
    • A rapid recovery will hasten the return of a trend in sliding sales
    • COVID-19 market disruption: risks and outcomes
      • Figure 16: Summary of Mintel scenario expectations and the impact on the individual pension market, 2021
  8. Market Segmentation

    • New insured SIPP business declines most substantially
    • FCA data also shows a notable decline in SIPP sales
    • Stakeholder segment decline deepens during the pandemic
      • Figure 17: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2016-21
      • Figure 18: Value of new individual personal pension, stakeholder pension and insured SIPP sales, 2016-21
    • Transfer business plunges further in 2020
      • Figure 19: Transfers as a share of new individual pension business, by product type, 2016-20
  9. Channels to Market

    • IFA channel disrupted by COVID-19
    • Restricted adviser-led personal pension sales grow strongly in 2020
      • Figure 20: New individual personal pension business, by sales channel, 2016-20
    • Non-advised sales most common in the stakeholder segment
      • Figure 21: New individual stakeholder pension business, by sales channel, 2016-20
    • IFAs dominated distribution of insured SIPPs
      • Figure 22: New individual insured SIPP business, by sales channel, 2016-20
    • Streamlined SIPPs more likely to be sold without advice
  10. Market Drivers

    • Savings ratio rises sharply during the pandemic
      • Figure 23: Household savings ratio, Q1 2015-Q1 2021
    • Consumer confidence rises following vaccine rollout
      • Figure 24: Mintel’s Consumer Confidence Tracker, January 2019-July 2021
    • Growth in workplace pension participation has flattened out
    • Multiple pension ownership will support transfer business long term
      • Figure 25: Proportion of employees enrolled in any type of workplace pension, 2010-20
    • Number of self-employed workers plummets during pandemic
      • Figure 26: Number of self-employed workers aged 16 years and older (seasonally adjusted), Q1 2010-Q2 2021
  11. Regulatory and Legislative Environment

    • Government exploring automated saving solutions for the self-employed
    • Normal Minimum Pension Age will rise to 57 in 2028
    • Pensions Dashboard launch delayed until 2023
    • FCA continues clampdown on poor DB pension transfer advice
  12. Companies and Brands – Key Takeaways

    • Royal London remains a leader in a highly concentrated market
    • Hargreaves Lansdown is the largest SIPP provider
    • Recent innovation targets the self-employed and pension consolidation
    • Global banking giants keep pace with innovation via acquisition
  13. Provider Rankings

    • BlackRock and Royal London leaders in a highly concentrated market
    • BlackRock ascends to the top spot based on workplace pension business
      • Figure 27: Rankings of top 20 providers of individual and work-based pension business, by gross written premiums, 2018 and 2019
    • Royal London individual pension sales decline sharply
    • Aviva experiences a fall in new savings and retirement business
    • Scottish Widows reports a decline in new personal pension business
    • Hargreaves Lansdown is the largest SIPP provider
    • Other key players in the SIPP market
  14. Competitive Strategies and Innovation

    • World’s largest banks entering robo-advice market via acquisition
    • Lloyds acquires Embark
    • JPMorgan follows Goldman Sachs into UK retail banking with acquisition of Nutmeg
    • Leading SIPP providers strengthen platform presence via acquisition
    • Standard Life Aberdeen rebrands as abrdn after acquisition of platform business
    • James Hay acquires Nucleus wrap platform
    • Xafinity SIPP and SSAS rebrands to XPS Self Invested Pensions
    • PensionBee floats onto the London Stock Exchange
    • New launches focus on the self-employed and pension consolidation
    • Plum introduces a SIPP onto its money management app
    • Raindrop launches digital pension for the self-employed
    • PensionBee creates new pension for sole traders and limited company directors
  15. The Consumer – Key Takeaways

    • Just over two fifths of pension savers hold an individual pension
    • Fewer now say COVID has impacted their pension
    • Notable minority of older savers never check the value of their pension
    • Encouraging level of interest in taking out a pension among under-45s
    • Saving more for retirement the main factor driving interest
    • Digital experience important in attracting younger savers
  16. Impact of COVID-19 on Consumer Behaviour

    • Household deposits swell during lockdowns
      • Figure 28: Total outstanding deposits from households, 2016-21
    • Affluent most likely to have seen their financial position strengthen
      • Figure 29: COVID-19 impact on financial situation, by annual household income, 2021
    • Saving still a priority even as caution about spending diminishes…
      • Figure 30: How consumers have been affected or changed their behaviour as a result of COVID-19, 2020 vs 2021
    • …but savings will take a backseat to spending when crisis is finally over
      • Figure 31: Financial priorities when COVID-19 is no longer a concern, 2021
  17. Pension Ownership

    • Two in five pension owners hold an individual pension
      • Figure 32: Type of pension owned, 2021
    • Women offer growth potential
      • Figure 33: Individual pension ownership, by gender, age and annual household income 2021
  18. Pension Engagement

    • Two fifths engage with their pension at least once every six months
      • Figure 34: How often owners of individual or group personal pensions check the value of their pension, by type of pension owned, 2021
    • A large minority of over-55s never check on the value of their pension
      • Figure 35: How often owners of individual or group personal pensions check the value of their pension, by age, 2021
    • Pension savers most likely to engage via provider’s website
      • Figure 36: Channels used to check the value of pension, by type of pension owned, 2021
    • Under-45s twice as likely as average to engage via a mobile app
      • Figure 37: Channels used to check the value of pension, by age, 2021
  19. Impact of COVID-19 on Management of Personal Pensions and SIPPs

    • The proportion who say COVID-19 has impacted behaviour has fallen
      • Figure 38: Impact of COVID-19 outbreak on individual and group pensions, 2020 vs. 2021
    • Few over-55s say retirement plans have changed due to COVID-19
    • Younger savers most likely to have been impacted
      • Figure 39: Impact of COVID-19 outbreak on individual and group pensions, by age, 2021
    • Modern life requires flexible solutions
  20. Interest in Arranging a Personal Pension or SIPP

    • Nearly two in five would consider opening a pension in the next two years
      • Figure 40: Proportion of UK adults interested in arranging an individual pension in the next 2 years, 2021
    • 29% of self-employed interested in arranging a pension for themselves
    • Under-45s most likely to express interest
    • Close to half who do not own a pension interested in opening one
      • Figure 41: Interest in arranging an individual pension in the next 2 years, by pension ownership, 2021
  21. Motivation for Arranging a Personal Pension or SIPP

    • Increasing amount of retirement savings is the primary motivation
      • Figure 42: Main reasons for interest in arranging an individual pension for oneself in the next 2 years, 2021
    • Two thirds of over-45s looking to boost retirement savings
      • Figure 43: Main reasons for arranging an individual pension for oneself in the next 2 years, by age, 2021
  22. Most Important Features when Choosing a Personal Pension or SIPP

    • A transparent fee structure is the most valued feature
      • Figure 44: Importance of select product features if taking out a new personal pension/SIPP, 2021
    • A high-tech experience important for younger savers…
    • …as is access to personalised financial advice
      • Figure 45: Proportion who identified select product features as essential or preferred if taking out a new personal pension/SIPP, by age, 2021
    • Ethical and social investment funds a lower tier priority
  23. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  24. Appendix – Central Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 46: Forecast and prediction intervals for the total value of UK new individual pension business, 2021-26
    • Market drivers and assumptions
      • Figure 47: Key drivers affecting Mintel’s market forecast, 2020-25
    • Forecast methodology
  25. Appendix – COVID Scenario Performance Methodology and Assumptions

    • Scenario performance
      • Figure 48: Scenario forecasts for the total individual pension market, 2016-26
    • Rapid COVID recovery, central and extended COVID disruption scenarios outline
    • Scenario 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.

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