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UK Retirement Planning market report

Everything you need to make the right decisions

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

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

What you need to know

Retirement planning is becoming more important than ever. People are living longer, meaning they need more extensive, secure retirement funding to see them through a longer average retirement. Starting to plan and save earlier in life will allow people to prepare in the most gradual way, avoiding serious problems as retirement approaches.

However, many people say they are financially reliant on the other people in their lives to support them in retirement, whether through inheritance, support from their partner, or direct financial support from relatives. While these might be suitable as backup plans to feed into a retirement strategy, the inherent risks mean people may find themselves with a financial shortfall if they rely on them too much.

The government is keen to encourage employers and pension providers to take a more prominent role in retirement planning. Employers and pension firms have the opportunity to step up their involvement through initiatives such as the Pensions Dashboard or robo-advice services, which help to support their commercial goals and promote better outcomes for retirees.

This Report examines the retirement planning environment, looking at the impact of government changes and initiatives as well as the range of options available to those planning their retirement. Mintel’s exclusive consumer research asks how people expect their retirement savings contributions to change in light of expectations about how their standard of living is likely to change when they retire. A comprehensive array of savings and investment products is considered in line with alternative funding plans, such as inheritance and property investment, to establish different approaches to saving.

Expert analysis from a specialist in the field

Written by Patrick Ross, a leading analyst in the Finance sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

As people continue to live longer and the government moves to limit the burden on the state, effective retirement planning will become more important than ever before. Older people are working for longer, whether out of necessity or choice. Initiatives such as the Pensions Dashboard will help encourage people to save more, but there is a tendency to rely too heavily on others to help fund retirement. Patrick Ross
Senior Financial Services Analyst

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • The length of the average retirement is growing
            • Figure 1: Expectation of life for those aged 65 in each year, period principal projection, UK, 1981-2064
          • Auto-enrolment has boosted workplace pension ownership
            • Figure 2: Proportion of employees with workplace pensions, by pension type, 1997-2016
          • The consumer
            • Almost two thirds have at least one pension product
              • Figure 3: Pension product ownership, October 2017
            • More than half have financial products other than pensions for retirement
              • Figure 4: Other savings and investment products held for retirement, by age, October 2017
            • Friends and family top the list of most likely sources
              • Figure 5: Most likely advice and guidance sources, October 2017
            • A quarter expect to increase contributions as they age
              • Figure 6: Outlook for retirement savings contributions, October 2017
            • Less than a third expect their standard of living to decline in retirement
              • Figure 7: Outlook for standard of living in retirement, October 2017
            • Non-retirees show frustration at moving state pension goalposts
              • Figure 8: Attitudes towards retirement and retirement planning, October 2017
            • What we think
            • Issues and Insights

              • Working later in life is becoming an accepted norm, particularly for women
                • The facts
                  • The implications
                    • Relying on friends and family in retirement may undermine other planning
                      • The facts
                        • The implications
                        • The Market – What You Need to Know

                          • The length of the average retirement is growing
                            • Auto-enrolment has boosted workplace pension ownership
                              • FCA and the government focus on improving support
                              • Retirement Planning Environment

                                • The length of the average retirement is growing
                                  • Figure 9: Expectation of life for those aged 65 in each year, period principal projection, UK, 1981-2064
                                • Longer life expectancy means a greater dependence on state support
                                  • Figure 10: UK population, by age band, and dependency ratios, 2016-86 (based on 2016 projections)
                                • The rate of increase in the state pension age has been accelerated
                                  • Figure 11: Projected dates for full transitions to increase state pension ages, by gender
                              • Retirement Funding Options

                                • Auto-enrolment has boosted workplace pension ownership
                                  • Figure 12: Proportion of employees with workplace pensions, by pension type, 1997-2016
                                • Millennials to bear the brunt of the drop-off in DB schemes
                                  • Figure 13: Proportion of employees with workplace pensions by age band and type of pension, 2016
                                  • Figure 14: Proportion of employee jobs with workplace pensions, by type of pension, 2016
                                • Fewer personal pensions are being arranged
                                  • Figure 15: Number of new individual personal and stakeholder pensions, 2011-16
                                • Lifetime ISA reframes ISAs as retirement savings vehicles
                                    • Figure 16: Number of ISAs and amounts subscribed, segmented by component type, 2010/11-2016/17
                                  • Annuity sales have been outpaced by income drawdown
                                    • Figure 17: Volume of new annuity and income drawdown sales, 2012-16
                                  • One in ten people aged 65+ are still working
                                    • Figure 18: Employment rate among people aged 65+, Q1 2010-Q3 2017
                                  • Buy-to-let regulation could discourage retirement planning linked to property
                                    • Figure 19: New buy-to-let mortgages, by purpose of loan, not seasonally adjusted, 2011-16*
                                • Regulatory and Legislative Changes

                                  • Pensions Dashboard prototype goes live
                                    • Three advisory firms due to merge into one
                                      • New rules mean annuity providers must encourage shopping around
                                      • The Consumer – What You Need to Know

                                        • Almost two thirds have at least one pension product
                                          • More than half have financial products other than pensions for retirement
                                            • Friends and family top the list of most likely sources of information
                                              • A quarter expect to increase contributions as they age
                                                • Less than a third expect their standard of living to decline in retirement
                                                  • Non-retirees show frustration at moving state pension goalposts
                                                  • Pension Product Ownership

                                                    • Almost two thirds have at least one pension product
                                                        • Figure 20: Pension product ownership, October 2017
                                                      • Younger Millennials lag behind on workplace pension ownership
                                                        • Figure 21: Pension product ownership, by generation, October 2017
                                                      • Pension ownership falls among lower earners
                                                          • Figure 22: Pension product ownership, by gross annual household income, October 2017
                                                      • Other Products and Plans for Retirement

                                                        • More than half plan to use non-pension savings and investments to fund retirement
                                                          • Figure 23: Other savings and investment products held for retirement, October 2017
                                                        • 25-34s are at risk of poor returns on cash savings
                                                          • Figure 24: Other savings and investment products held for retirement, by age, October 2017
                                                        • A third of non-retired people plan to fund retirement through an earned income…
                                                            • Figure 25: Other retirement funding plans, October 2017
                                                          • … rising to 46% of non-retired females aged 55+
                                                              • Figure 26: Other retirement funding plans, by age and gender, October 2017
                                                            • Half of non-retired people focus on 1-3 alternative products and plans
                                                              • Figure 27: Number of other savings/investment products and retirement funding plans, combined repertoire, October 2017
                                                          • Most Likely Advice and Guidance Sources

                                                            • Friends and family top the list of most likely sources
                                                                • Figure 28: Most likely advice and guidance sources, October 2017
                                                              • Personal pension holders more likely to take formal advice
                                                                • Figure 29: Most likely advice and guidance sources, by pension product ownership, October 2017
                                                              • Younger people recognise they will need support
                                                                  • Figure 30: Use of any advice source, October 2017
                                                              • Outlook for Retirement Savings Contributions

                                                                • A quarter expect to increase contributions as they age
                                                                  • Figure 31: Outlook for retirement savings contributions, October 2017
                                                                • Good intentions to increase contributions weaken as people age
                                                                  • Figure 32: Outlook for retirement savings contributions, October 2017
                                                                • People with alternative retirement funding plans are still more likely to say savings will increase
                                                                  • Figure 33: Outlook for retirement savings contributions, by other retirement funding plans, October 2017
                                                              • Outlook for Standard of Living in Retirement

                                                                • Less than a third expect their standard of living to decline in retirement
                                                                  • Figure 34: Outlook for standard of living in retirement, by outlook for retirement savings contributions, October 2017
                                                                • Younger people are more optimistic about an improvement in their standard of living
                                                                  • Figure 35: Outlook for standard of living in retirement, October 2017
                                                              • Attitudes towards Retirement and Retirement Planning

                                                                • Non-retirees show frustration at moving state pension goalposts
                                                                  • Figure 36: Attitudes towards retirement and retirement planning, October 2017
                                                                • Scammers are undermining confidence in retirement planning
                                                                  • Just a quarter have made plans for future care needs
                                                                    • People are facing up to the reality of a ‘working retirement’
                                                                        • Figure 37: Agreement with the statement ‘I don’t think I will ever fully retire’, October 2016 / October 2017
                                                                      • Older people less keen on later life entrepreneurship scheme
                                                                        • Figure 38: Agreement with the statement ‘It would be a good idea to let people take money from their pension to set up a new business in later life’, by age, October 2017
                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                        • Abbreviations
                                                                          • Consumer research methodology