2022
9
UK Personal Pensions Market Report 2022
2022-11-12T03:07:23+00:00
OX1102603
2195
157411
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Report
en_GB
“The rare period of significant growth seen in individual pensions in 2021 has proven to be short-lived. The considerable increase in the cost of living during 2022 has damaged consumer…

UK Personal Pensions Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Personal Pensions Market Report identifies consumers’ attitudes and behaviours towards personal pensions and retirement planning, competitive strategies by leading pension providers and the impact of the cost of living on the UK pension market. This report covers the personal pension market size UK, market forecast, market segmentation and trends in the UK pension market.  

 

Current UK Pensions Market Landscape

After experiencing solid growth in 2021, the cost of living crisis has negatively impacted the personal UK pension market in 2022. However, continued demand from more affluent consumers who are more insulated from the impact of high inflation and who has built up excess savings during the pandemic, is expected to prevent a significant decline in the UK pension market during the year.

 

Personal Pension Market Size UK and Key Industry Trends

Unfavourable changes to pension legislation remains the biggest threat to the individual UK pension market. The introduction of workplace pension auto-enrolment has considerably reduced the need for privately arranged pensions, while stricter regulation around defined benefit (DB) to defined contribution (DC) pension transfer advice has severely impacted a significant avenue of new business generation.

  • Personal pension market size UK: After rising by 10% in 2021, Mintel expects the total value of new individual personal pension premium income to grow by 1% in 2022.
  • 59% of UK adults who own any type of pension holding have two or more pension pots.
  • 17% of UK adults say they will likely combine their pensions into one in the next two years.
  • 23% of pension holders pay between £50-99 a month into their pension.

 

Future UK Pension Market Trends

A more stable economic environment will place consumers in a better position to make long-term retirement planning decisions. The ongoing development of direct-to-consumer digital personal pension products is helping to expand access to the UK pension market by reducing the industry’s reliance on often costly intermediaries.

However, generating new business in the individual UK pension market will remain challenging. Workplace auto-enrolment has permanently impaired pure new business prospects, while stricter regulation of pension transfers has cut down a significant driver of new single premium business.

To discover more about the UK Personal Pension Market Report 2022, read our UK Retirement Planning Market Report 2022, or take a look at our Financial Services Market Research Reports.

 

Quickly Understand

  • How the individual UK pension market has performed during the pandemic and a five-year forecast of new business.
  • The impact of the cost of living on the UK pension market, and how consumer attitudes and behaviours around personal pensions and retirement planning have been influenced.
  • A ranking of the top pension providers and an overview of recent innovations and competitive strategies.
  • Ownership of individual pensions among UK consumers.
  • Interest in taking out a new individual pension product and what consumers view as the most important features when arranging a new personal pension or SIPP.
  • Explores personal pension market size UK and UK pension market trends.

 

Covered in this Report

Products: Personal pensions, stakeholder pensions, self-invested personal pensions.
Brands: 
BlackRock, Royal London Mutual, Aviva plc, Lloyds Banking Group, Phoenix Group Holdings, M&G, Fidelity, Liverpool Victoria Financial Services, Vitality Life Limited, Wesleyan Assurance, NFU Mutual, Zurich Financial Services, Sun Life Financial of Canada, LCCG UK Limited, Canada Life, Chesnara Plc, Forester Life Limited.

 

Expert Analysis from a Specialist in the UK Pension Market

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

The rare period of significant growth seen in individual pensions in 2021 has proven to be short-lived. The considerable increase in the cost of living during 2022 has damaged consumer confidence and reduced the amount of funds available to place into a pension. Over the longer-term the UK pension market is likely to revert to its pre-pandemic trend of progressive decline. Although the rise of innovative and more affordable digital personal pensions and expected rise in demand for pension consolidation will help to support growth, auto-enrolment continues to effectively cut out demand for individual pensions from the mass market, and there are now fewer opportunities for organic growth apart from the notoriously difficult to reach self-employed.

George Zaborowski
Senior Analyst – Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for individual personal pensions
      • Figure 1: Category outlook for individual pension, 2022-27
    • The market
    • New individual personal pension market growth slows considerably in 2022…
      • Figure 2: Market size and forecast for the total value of UK new individual pension business, 2017-27
    • IFA-led new business rebounds in 2021
    • Direct sales channel continues to grow in importance
    • Companies and brands
    • Royal London and Aviva are the market leaders
    • Hargreaves Lansdown the top SIPP provider
    • M&A activity in the SIPP sector
    • Recent innovation centred on pricing, money management, and ESG
    • The consumer
    • Close to half of pension owners have an individual pension
      • Figure 3: Type of pension owned, 2022
    • Three in five pension owners have multiple pension pots
      • Figure 4: Number of different pension pots owned, 2022
    • Two fifths with multiple pensions likely to consolidate in next two years
      • Figure 5: Likelihood multiple pension pot holders will combine 2 or more pensions in next two years, 2022
    • Monthly contributions under £100 are most common
      • Figure 6: Approximate value of monthly contributions into an individual personal pension product, 2022
    • Most are self-managing their individual pension
      • Figure 7: Person who manages individual personal pension, 2022
    • High inflation predictably a worry for most pension savers
      • Figure 8: Agreement with statements about saving in an individual personal pension, 2022
    • A third would consider arranging a pension in the next two years
      • Figure 9: Proportion of UK adults interested in arranging an individual pension in the next two years, 2022
    • A transparent fee structure is the most valued product feature
      • Figure 10: Importance of select product features if taking out a new personal pension/SIPP, 2022
  3. Issues and Insights

    • Cost of living crisis an opportunity for FinTech providers to show their worth
    • Pension consolidation set to be an ever more significant driver of new business
  4. Market Size and Performance

    • Number of in-force individual pensions continues to decline…
    • …but total in-force premium income rose in 2021
      • Figure 11: Individual pension business in force, by product type, 2021
    • New individual pensions business expected to stagnate in 2022
      • Figure 12: New individual pensions business, 2017-22
  5. Market Forecast

    • High inflation will hamper near-term demand
      • Figure 13: Category outlook for individual pensions, 2022-27
    • New individual pension sales to stagnate after a strong 2021
    • Pension consolidation set to be a main driver of new business
      • Figure 14: Market size and forecast for the total value of UK new individual pension business, 2017-27
      • Figure 15: Market size and forecast for the total value of UK new individual pension business, at current and 2021 prices, 2017-27
    • Learnings from the last income squeeze
      • Figure 16: New individual pension business, total value of new regular premiums, 2007-15
      • Figure 17: New individual pension business, value of regular premiums, by type of pension, 2007-15
    • Forecast methodology
  6. Market Segmentation

    • Personal pension segment experiences robust performance in 2021
    • Stakeholder segment experiences rare period of growth in new business
    • New insured SIPP business lags behind
    • FCA data shows that new SIPP sales rose by 15% in 2021
      • Figure 18: Number of new individual personal pension, stakeholder pension and insured SIPP sales, 2017-22
      • Figure 19: Value of new individual personal pension, stakeholder pension and insured SIPP sales, 2017-22
    • Transfers business is down but remains the key driver of new business
      • Figure 20: Transfers as a share of new individual pension business, by product type, 2017-21
  7. Channels to Market

    • IFAs bounce back from COVID-19 disruption
    • Direct sales rise in 2021
    • Hybrid advice the way forward for individual pensions
    • Restricted adviser-led personal pension sales rise again
      • Figure 21: New individual personal pension business, by sales channel, 2017-21
    • Direct sales account for 60% of new individual stakeholder business
      • Figure 22: New individual stakeholder pension business, by sales channel, 2017-21
    • Majority of insured SIPP sales are IFA-led
      • Figure 23: New individual insured SIPP business, by sales channel, 2017-21
    • Around half of Streamlined SIPPs are sold without advice
  8. Market Drivers

    • High inflation reducing amount people can save
    • Savings ratio has fallen back toward pre-pandemic levels…
      • Figure 24: Household savings ratio, Q1 2015-Q1 2022
    • …but the total value of household deposits has continued to rise
      • Figure 25: Total outstanding deposits from households, 2016-21
    • Expansion in workplace pension participation has stabilised
    • Multiple pension ownership will drive consolidation activity
      • Figure 26: Proportion of employees who are enrolled in a workplace pension, 2011-21
    • Number of self-employed people has fallen dramatically
      • Figure 27: Number of self-employed workers aged 16 years and older (seasonally adjusted), Q1 2012-Q2 2022
  9. Regulatory and Legislative Environment

    • Government unveils flexible retirement savings pilots for self-employed
    • Pensions Dashboards may finally become a reality in 2023
    • Cost of DB to DC pension transfer advice rises following FCA crackdown
    • DWP explores ways to encourage greener pension investing
  10. Provider Rankings

    • A market dominated by a small number of large firms
    • Number of providers shrinks following Phoenix Group’s 2020 acquisition of ReAssure
    • BlackRock and Royal London are the market leaders
      • Figure 28: Rankings of top 17 providers of individual and work-based pension business, by gross written premiums, 2020 and 2021
    • Aviva slips into third despite growing new business in 2021
    • Scottish Widows individual pension business rebounds in 2021
    • Hargreaves Lansdown is the SIPP market leader
    • Other key players in the SIPP segment
  11. Competitive Strategies

    • Takeover activity continues in the SIPP sector
    • Mercer SIPP business acquired by Options Pensions parent company STM Group
    • XPS Pensions buys SIPP provider Michael J Field Consulting Actuaries
    • iPensions buys SIPP business from now defunct Forthplus Pensions
    • Aviva acquires independent advice firm, Succession Wealth
    • Recent innovation focused on pricing, money management, and ESG
    • Interactive Investor unveils new low cost ‘flat fee’ SIPP
    • PensionBee creates partnership with money saving app ‘Snoop’
    • Scottish Widows launches ‘Find Your Impact’ to promote ESG investing
    • Curtis Banks introduces new suite of tools to help advisers streamline operations
  12. Pension Ownership

    • Nearly half of pension owners hold an individual pension
      • Figure 29: Type of pension owned, 2022
    • Women remain an underrepresented group in the market
      • Figure 30: Individual pension ownership, by gender, and age, 2022
    • Around three in five hold multiple pension pots
      • Figure 31: Number of different pension pots owned, 2022
      • Figure 32: Number of different pension pots owned, by type of pension owned, 2022
  13. Pension Consolidation Intentions

    • Two in five multiple pension owners likely to consolidate in next two years
      • Figure 33: Likelihood multiple pension pot holders will combine 2 or more pensions in next two years, 2022
    • Under-45s twice as likely as their elders to be planning to merge pots
    • More needs to be done to encourage older savers to consolidate
  14. Value of Monthly Personal Pension Contributions

    • Monthly contributions are most commonly under £100
      • Figure 34: Approximate value of monthly contributions into an individual personal pension product, 2022
    • Younger pension savers should be encouraged to save more
      • Figure 35: Approximate value of monthly contributions into an individual personal pension product, 2022
    • 11% with a privately arranged individual pension contribute £200 or more
      • Figure 36: Approximate value of monthly contributions into an individual personal pension product, by type of pension owned, 2022
  15. Who Manages the Personal Pension

    • Most are self-managing their individual pension
      • Figure 37: Person who manages individual personal pension, 2022
    • Limited access to personalised advice may be holding the market back
    • New FinTech can provide a boost as it is embraced more widely
  16. Attitudes and Behaviour Towards Personal Pensions

    • Inflation unsurprisingly a concern for most pension savers
    • Younger savers most likely to have reduced or stopped contributions…
    • …but are also the most likely to be planning to increase them
    • A marketing opportunity for FinTechs
      • Figure 38: Agreement with statements about saving in an individual personal pension, 2022
    • More needs to be done to encourage active retirement planning
    • New technology is reducing reliance on expensive personalised advice
    • Middle-aged and female pension savers need more attention
  17. Interest in Arranging a Personal Pension Product

    • A third of adults would consider opening a pension in the next two years
      • Figure 39: Proportion of UK adults interested in arranging an individual pension in the next two years, 2022
    • Interest among the self-employed remains underwhelming
    • Two in five under-45s interested in a pension for themselves
    • Interest in opening a pension among non-owners has fallen in 2022
      • Figure 40: Interest in arranging an individual pension in the next two years, by pension ownership, 2022
  18. Most Important Features when Choosing a Personal Pension Product

    • A transparent fee structure is the most important product feature
      • Figure 41: Importance of select product features if taking out a new personal pension/SIPP, 2022
    • Younger savers attracted to a high-quality digital pension experience
    • Improving access to personalised advice likely to boost new business
      • Figure 42: Proportion who identified select product features as essential or preferred if taking out a new personal pension/SIPP, by age, 2022
    • Ethical investing remains a lower-level priority but cannot be overlooked
  19. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  20. Appendix – Forecast Methodology

    • Market forecast and prediction intervals
      • Figure 43: Forecast and prediction intervals for the total value of UK new individual pension business, 2022-27
    • 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.

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