2021
9
UK Retirement Planning Market Report 2021
2021-08-03T04:05:08+01:00
OX1049545
2195
141105
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Report
en_GB
“Only 34% of people aged over-45-65 have sought expert advice on a pension or retirement-related matter. Yet many more are interested in doing so. This shows there is good scope…

UK Retirement Planning Market Report 2021

£ 2,195 (Excl.Tax)

Description

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

Just 26% of people aged 45-65 know exactly what level of income they will need to fund the lifestyle they are expecting in retirement, while only 40% are confident of saving enough. As worrying, Mintel’s research finds that most people leave making preparations for their retirement until at least their 50s or 60s, and some fail to make any at all. By not planning ahead, many people are at risk of making poor choices and, potentially, facing financial hardship in later life.

The COVID-19 pandemic has shown the importance of making financial plans, but also the need for building in some flexibility. Around one in seven 45-65 year olds have had to alter their plans for retirement, because of the crisis and the disruption caused to the stock markets, particularly at the outset. The global crisis has also served to remind people of the value of taking expert advice and guidance.

The biggest threats to this market are consumer inertia and procrastination. Most people are generally not engaged with their pensions or give much thought to their retirement until it is almost upon them. Not only do the majority of people make inadequate preparation, but many also fail to take expert advice. Mintel’s research shows that only around a third of people aged 45-65 and non-retirees aged 66 and over have taken expert pension or retirement-related advice.

On a more optimistic note, there is significant interest among over-45s in seeking professional advice on these matters. This means there is good scope to expand the market. The challenge for pension advisers and financial planners, however, is to convert this level of interest, and need, into positive action and engagement.

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

Quickly understand

  • The impact of COVID-19 on the retirement planning market, as well as on the plans of individuals who are approaching/at retirement.
  • The plans and provisions people are making/intending to make for their retirement and later life.
  • Retirement-related expectations, eg confidence in amount saved, likelihood of taking a phased approach.
  • Interest in the concept of a pensions dashboard and the free guidance service, Pension Wise.
  • Use of, and appetite for, professional advice and retirement planning services.
  • Retirement needs analysis.
  • Financial post-retirement analysis.
  • Retirement planning consumer trends.

Expert analysis from a specialist in the field

Written by Sarah Hitchcock, a leading analyst in the Financial sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Only 34% of people aged over-45-65 have sought expert advice on a pension or retirement-related matter. Yet many more are interested in doing so. This shows there is good scope to expand the market for retirement planning and advice. The challenge for advisers is to convert this interest into positive action and engagement.

Sarah Hitchcock
Associate Consultant – Financial Services

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Scope of this Report
    • Definitions of terms used in the Report
  2. Executive Summary

    • Impact of COVID-19 on the market for retirement planning and advice
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on retirement planning market, 2021
    • The market
    • Advice firms see greater client activity and demand for services as restrictions ease
    • Most people accessing their pension pots for the first time fail to take advice
      • Figure 2: Number of DC pension pots accessed for the first time, by use of advice or guidance, 2019/20
    • Sales of retirement income products fall in 2020 as a result of the pandemic
    • Pensions dashboards scheduled to become widely available in 2023
    • Urgent calls for a ‘later-life checklist’ for over-50s
    • The consumer
    • 4% of adults are under state pension age and have retired
      • Figure 3: Segmental breakdown of total sample, by age and whether or not retired, 2021
    • 9% of pension savers don’t know how many pension pots they have
      • Figure 4: Total number of pension pots owned, 2021
    • Significant numbers are building up retirement funds outside a pension
    • 42% of over-45s are confident of having adequate retirement savings
      • Figure 5: Confidence in having enough saved for retirement among over-45s, 2021
    • Concerns about cost is deterring many from seeking advice…
      • Figure 6: Agreement with statements about keeping track of pensions and options at retirement, 2021
    • …but there is significant scope for growth in the market
      • Figure 7: Areas sought advice on relating to retirement/estate planning, 2021
    • Most people leave planning for their retirement too late, if they do it at all
      • Figure 8: Preparations made for retirement/later life, 2021
  3. Issues and Insights

    • COVID-19 has boosted demand for advice and created opportunities for advice market to broaden its reach
    • Start the journey early to maximise consumer engagement and preparedness
  4. The Market – Key Takeaways

    • 2020 was a difficult year for many financial advice firms
    • Client activity and demand set to increase during 2021
    • More needs to be done to get people to seek advice or guidance…
    • …with low annuity rates making this even more pressing
    • Pensions dashboards due to come on stream in 2023
  5. Market for Retirement Planning and Advice

    • Impact of COVID-19 on the retirement planning market
      • Figure 9: Short-, medium- and long-term impact of COVID-19 on retirement planning market, 2021
    • Financial advice firm numbers were stable pre-pandemic
      • Figure 10: Number of regulated financial advice firms, by category of firm, 2016-19
    • Most financial advice firms are independent
      • Figure 11: Financial adviser firms, by type of advice and value of adviser charges, 2019
    • Reduced investment income hit profit margins in 2020
      • Figure 12: Financial adviser firms’ average profit margins, by size of firm, 2019
    • Many advice firms were negatively impacted during the early phase of the pandemic…
      • Figure 13: Percentage of firms experiencing or expecting a decrease in net income due to the coronavirus pandemic, by sector, June-August 2020
    • …with two thirds experiencing/expecting a drop in income
      • Figure 14: Percentage of firms experiencing or expecting a decrease in net income due to the coronavirus pandemic, by sector, June-August 2020
  6. Market Context

    • Scope of retirement planning
    • Over half of all pension pots accessed in 2019/20 were fully withdrawn
      • Figure 15: Number of DC pension pots accessed for the first time, by usage, 2018/19-2019/20
    • Many fail to take guidance or advice before accessing their pension
      • Figure 16: Number of DC pension pots accessed for the first time, by use of advice or guidance, 2019/20
    • Pandemic hits sales of both annuities and drawdown products
      • Figure 17: Number of new pension annuity and income drawdown sales, 2014-20
    • Pitifully low interest rates further reduce appeal of annuities
    • Four fifths of annuities are sold without advice
    • A growing number of drawdown sales are non-advised
    • Significant minority of over-65s still have pension savings to draw on
      • Figure 18: Approximate value of pension savings, by age, 2020
  7. Regulatory Update

    • Investment pathways should increase demand for retirement advice
    • Pension freedoms age to rise to 57 before the end of the decade
    • Pensions dashboard delayed to 2023
    • Money and Pensions Service to launch post-COVID ‘later-life checklist’
  8. The Consumer – Key Takeaways

    • More working over-55s feel worse off than better off relative to a year ago
    • Many pension savers have multiple pots, making it hard to keep track
    • More than half of all adults are not confident of saving enough…
    • …and most have no idea what level of income they’ll need in retirement
    • Non-pension savers are the least prepared and most vulnerable
  9. Impact of COVID-19 on Consumer Behaviour

    • 8% of over-55s were still on furlough in June 2021
      • Figure 19: Current working situation, by age, 2021
    • Homeworking is set to remain a feature of working life
      • Figure 20: Number of days expecting to be working at home in six months’ time, by age, 2021
    • Retired over-55s are generally feeling better off than their non-retired counterparts
      • Figure 21: Trends in financial situation compared to a year ago, by age, 2021
    • Pandemic has disrupted the retirement plans of one in seven over-45s
      • Figure 22: Impact of COVID-19 on retirement plans, by age, 2021
  10. Population Breakdown by Working Status

    • One in six adults over state pension age are still working
      • Figure 23: Working status, by gender and age, 2021
    • Retirees account for around a fifth of the UK’s total adult population
      • Figure 24: Segmental breakdown of total sample, by age and whether or not retired, 2021
  11. Pension Ownership

    • 62% of non-retired adults are paying into a pension
      • Figure 25: Proportion of non-retired adults contributing to a pension, by type, 2021
    • Participation rate is lower among part-time employees and women
    • Just 30% of the self-employed are making pension contributions…
      • Figure 26: Proportion of non-retired adults contributing to a pension, by working status, 2021
    • …although a larger proportion will have a pension
      • Figure 27: Pension ownership among the those not currently contributing to a pension, by working status, 2021
    • 9% of pension savers don’t know how many pension pots they have
      • Figure 28: Total number of pension pots owned, 2021
  12. Other Sources of Retirement Funding

    • 45% are saving for their retirement outside a pension
      • Figure 29: Other sources of income either using or expecting to use in retirement, 2021
    • 11% are planning to release equity from their home
    • 12% of under-66s expect to be financially supported by their partner
  13. Over-45s: Retirement Plans and Engagement

    • Many over-45s are not confident of having sufficient retirement savings
      • Figure 30: Confidence in having enough saved for retirement among over-45s, 2021
    • Around a third expect to take a phased approach to retirement…
      • Figure 31: Planning to take/are taking a phased approach to retirement, 2021
    • …and is more likely to be considered by those with a pension
      • Figure 32: Over-45s who are planning to take/are taking a phased approach to retirement, by pension ownership, 2021
    • 45% have concerns about the potential cost of using an adviser
      • Figure 33: Concerns about cost of professional advice, 2021
    • Just one in four pension savers aged 45+ will use Pension Wise
      • Figure 34: Agreement with statements about keeping track of pensions and options at retirement, 2021
  14. Over-45s: Use of Professional Advice

    • Just 16% of 45-54 year olds have sought advice on their retirement plans…
    • …but a further 36% are interested in doing so
      • Figure 35: Areas sought advice on relating to retirement/estate planning, 2021
    • One in four over-45s have sought advice on their pension options
      • Figure 36: Areas sought advice on relating to pensions, 2021
    • 34% of over-45s have sought advice on at least one retirement-related matter
      • Figure 37: Proportion of over-45s who have sought professional advice on an area relating to pensions or retirement/estate planning, 2021
  15. Preparations for Retirement and Later Life

    • Few make adequate preparations for retirement
      • Figure 38: Preparations made for retirement/later life, 2021
      • Figure 39: Preparations made for retirement/later life, by pension ownership, 2021
  16. Appendix – Data Sources and Abbreviations

    • Abbreviations
    • Consumer research methodology

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