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Workplace Pensions - UK - June 2019

Covered in this report

There are various types of workplace pension, which can be broadly segmented into two main groups: occupational trustbased schemes and group contract-based pensions.

The focus of this Report is on insurance-administered workplace schemes, comprising funded occupational pensions, group personal pensions (GPPs) and group stakeholder pensions (GSPs).

“The success of auto-enrolment has resulted in 10 million workers being introduced to workplace pensions. Minimum contributions have increased without leading to mass opt-outs, but engagement remains vital to secure a comfortable retirement. The impending launch of Pensions Dashboards is expected to simplify visualisation and management, but the government and the industry need to capitalise on its potential by assuming a united front.”

– Irene Salazar, Senior Financial Services Analyst

This report examines the following issues:

  • Pensions Dashboards need to go live with a bang…
  • …but security will be paramount
  • Pensions Dashboards and pot consolidation

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Table of contents

  1. Overview

    • What you need to know
      • Scope of this Report
        • Trust-based pensions
          • Contract-based pensions
          • Executive Summary

              • The market
                • Pension business continues to grow…
                  • …driven mainly by single-premium contracts
                    • Figure 1: New workplace pension business (volume and value), by type of premium, 2014-18
                  • Completion of auto-enrolment stages signals stabilisation
                    • Figure 2: Forecast of the volume of new workplace pension contracts, 2014-24
                  • Pension ownership continues to rise
                    • Defined-contribution schemes account for 98% of auto-enrolment
                      • First Pensions Dashboard expected in 2019
                        • DWP launches consultation on the consolidation of DB schemes
                          • Ban on pension cold-calling comes into force
                            • Deadline for master trusts authorisation
                              • Companies and brands
                                • PIC claims top spot in trust-based pension business
                                  • Royal London biggest provider of individual and work-based sector
                                    • Providers making pensions more accessible
                                      • Pensions, savings and financial wellbeing
                                        • The consumer
                                          • 73% of workers are enrolled
                                            • Figure 3: Workplace pension enrolment, March 2019
                                          • Confusion persists over type of pension held
                                            • Figure 4: Type of workplace pension enrolled in, March 2019
                                          • Majority are aware of the increase to minimum contributions
                                            • Figure 5: Awareness of the minimum contribution increase, March 2019
                                          • Workers less likely to make voluntary contributions
                                            • Figure 6: Pension contribution intentions, March 2019
                                          • Government expected to educate people…
                                            • Figure 7: Top parties responsible for educating people about pensions, March 2019
                                          • …and trusted to run Pensions Dashboards
                                            • Figure 8: Trust in Pensions Dashboards providers, March 2019
                                          • More than half of workplace pension holders are interested in joining a Pensions Dashboard
                                            • Figure 9: Willingness to join a Pensions Dashboard, March 2019
                                          • Fees and lack of knowledge are the biggest obstacles to pension pot consolidation
                                            • Figure 10: Barriers to pension pot consolidation, March 2019
                                          • What we think
                                          • Issues and Insights

                                            • Pensions Dashboards need to go live with a bang…
                                              • The facts
                                                • The implications
                                                  • …but security will be paramount
                                                    • The facts
                                                      • The implications
                                                        • Pensions Dashboards and pot consolidation
                                                          • The facts
                                                            • The implications
                                                            • The Market – What You Need to Know

                                                              • Pension business continues to grow…
                                                                • …driven mainly by single-premium contracts
                                                                  • Pension ownership continues to rise
                                                                    • Defined-contribution schemes account for 98% of auto-enrolment
                                                                      • First Pensions Dashboard expected in 2019
                                                                        • DWP launches consultation on the consolidation of DB schemes
                                                                          • Ban on pension cold-calling comes into force
                                                                            • Deadline for master trusts authorisation
                                                                            • Market Size and Forecast

                                                                              • Pension business continues to grow…
                                                                                • Figure 11: New workplace pension business (volume and value), 2014-18
                                                                              • …driven mainly by single-premium contracts…
                                                                                • Figure 12: New workplace pension business (volume and value), by type of premium, 2014-18
                                                                              • …but the market is entering a steady phase
                                                                                • Figure 13: Forecast of the volume of new workplace pension contracts, 2014-24
                                                                                • Figure 14: Forecast of the volume of new workplace pension contracts, 2014-24
                                                                              • Forecast methodology
                                                                              • Trends in Workplace Pension Ownership

                                                                                • 76% of employees are members of a workplace pension scheme
                                                                                  • Figure 15: Proportion of employees with workplace pensions, 1997-2018
                                                                                • Private sector employee contribution in line with minimum requirements
                                                                                  • Figure 16: Percentage of salary personally contributed by employees with workplace pensions, by sector, 2016-18
                                                                                • Type of pension owned
                                                                                  • Figure 17: Employees with workplace pensions, by type of pension and sector, 2018
                                                                              • Market Drivers

                                                                                • Employers continue to meet auto-enrolment duties
                                                                                  • Figure 18: Declarations of compliance, April 2019
                                                                                • Defined-contribution schemes account for 98% of auto-enrolment
                                                                                  • Figure 19: Pension scheme used for auto-enrolment, 2017 and 2018
                                                                                • At least 180,000 employers expected to have duties by 2020/21
                                                                                  • Figure 20: Quarterly forecast of employers due to comply with auto-enrolment, 2018/19-2020/21
                                                                              • Regulatory and Legislative Changes

                                                                                • Phased increase to minimum contributions enters final stage
                                                                                  • Figure 21: Minimum employer and staff contributions to be paid to workplace pensions
                                                                                • First Pensions Dashboard expected in 2019
                                                                                  • Single Financial Guidance Body renamed Money and Pensions Service
                                                                                    • DWP launches consultation on the consolidation of DB schemes
                                                                                      • Ban on pension cold-calling comes into force
                                                                                        • Changes in State Pension age
                                                                                          • FCA calls for “wake up” information packs to support workers on pension decisions
                                                                                            • Deadline for master trusts authorisation
                                                                                              • FCA and The Pensions Regulator launch joint strategy
                                                                                              • Companies and Brands – What You Need to Know

                                                                                                • PIC claims top spot in trust-based pension business
                                                                                                  • Royal London biggest provider of individual and work-based sector
                                                                                                    • Providers making pensions more accessible
                                                                                                      • Pensions, savings and financial wellbeing
                                                                                                        • Pensions in the FCA’s regulatory sandbox
                                                                                                          • Adspend exceeds £50 million
                                                                                                          • Provider Rankings

                                                                                                            • PIC claims top spot in trust-based pension business
                                                                                                              • Figure 22: Rankings of top 20 providers of trust-based pension business, by gross written premiums, 2015-17
                                                                                                            • Royal London becomes biggest provider of individual and work-based sector
                                                                                                              • Figure 23: Rankings of top 20 providers of individual and work-based pension business, by gross written premiums, 2015-17
                                                                                                          • Competitive Strategies

                                                                                                            • LBG’s online and mobile banking integrate Scottish Widows pensions
                                                                                                              • Legal & General launches financial wellbeing platform
                                                                                                                • PensionBee introduces three new plan options
                                                                                                                  • Pensions in the FCA’s regulatory sandbox
                                                                                                                    • “Alexa, ask Aviva for my pension value”
                                                                                                                      • Pensions and money advice in the workplace
                                                                                                                        • Workplace ISAs as a complement to pensions
                                                                                                                        • Advertising and Marketing Activity

                                                                                                                          • Above-the-line expenditure exceeds £50 million
                                                                                                                            • Figure 24: Total above-the-line, online display and direct mail advertising expenditure on pension products and advice, 2014/15-2018/19*
                                                                                                                          • Digital channels account for two thirds of spend
                                                                                                                            • Figure 25: Above-the-line, online display and direct mail advertising expenditure on pension products and advice, by media type, 2018/19*
                                                                                                                          • 99% of adspend concentrated in top 10 spenders
                                                                                                                            • Figure 26: Top 10 above-the-line, online display and direct mail advertisers of pension products and advice, 2017/18-2018/19*
                                                                                                                          • Other industry campaigns
                                                                                                                            • Nielsen Ad Intel coverage
                                                                                                                            • The Consumer – What You Need to Know

                                                                                                                              • 73% of workers are enrolled
                                                                                                                                • Confusion persists over type of pension held
                                                                                                                                  • Majority are aware of the increase to minimum contributions
                                                                                                                                    • Workers less likely to make voluntary contributions
                                                                                                                                      • Government expected to educate people…
                                                                                                                                        • …and trusted to run Pensions Dashboards
                                                                                                                                          • More than half of workplace pension holders are interested in joining a Pensions Dashboard
                                                                                                                                            • Fees and a lack of knowledge are the biggest obstacles to pot consolidation
                                                                                                                                            • Pension Enrolment

                                                                                                                                              • 73% of workers are enrolled
                                                                                                                                                • Figure 27: Workplace pension enrolment, March 2019
                                                                                                                                            • Type of Workplace Pension Scheme

                                                                                                                                              • Almost half of workers believe they are enrolled in a DB scheme
                                                                                                                                                • Technology should help improve engagement and understanding
                                                                                                                                                  • Figure 28: Type of workplace pension enrolled in, by sector, March 2019
                                                                                                                                              • Awareness of the Minimum Contribution Increase

                                                                                                                                                • Overall good levels of awareness…
                                                                                                                                                  • Figure 29: Awareness of the minimum contribution increase, March 2019
                                                                                                                                                • …but there are important differences by demographics
                                                                                                                                                • Pension Contribution Intentions

                                                                                                                                                  • Workers less likely to make voluntary contributions
                                                                                                                                                    • The risk of mass opt-outs remains low
                                                                                                                                                      • Figure 30: Pension contribution intentions, March 2019
                                                                                                                                                    • Rainy day vs retirement
                                                                                                                                                      • Seamless spending and seamless saving
                                                                                                                                                      • Educating People about Pensions

                                                                                                                                                        • Government and employers expected to guide people
                                                                                                                                                          • Figure 31: Top parties responsible for educating people about pensions, March 2019
                                                                                                                                                        • People recognise the importance of schools
                                                                                                                                                          • Figure 32: Parties responsible for educating people about pensions, rank, March 2019
                                                                                                                                                      • Willingness to Engage with Pensions Dashboards

                                                                                                                                                        • The concept of Pensions Dashboards appeals to the majority
                                                                                                                                                          • Figure 33: Willingness to join a Pensions Dashboard, March 2019
                                                                                                                                                        • No, or don’t know?
                                                                                                                                                          • Parents of young children are an important demographic
                                                                                                                                                            • Figure 34: Willingness to join a Pensions Dashboard – CHAID – Tree output, March 2019
                                                                                                                                                        • Trust in Pensions Dashboard Providers

                                                                                                                                                          • Once again, the government comes top in terms of trust
                                                                                                                                                            • Pensions Dashboards and Open Banking
                                                                                                                                                              • Figure 35: Trust in Pensions Dashboards providers, March 2019
                                                                                                                                                          • Barriers to Pension Pot Consolidation

                                                                                                                                                            • Fees are the biggest single obstacle…
                                                                                                                                                              • …but educating people is even more relevant
                                                                                                                                                                • Figure 36: Barriers to pension pot consolidation, March 2019
                                                                                                                                                              • Pensions Dashboards and pot consolidation
                                                                                                                                                                • The DIY group: over-confident?
                                                                                                                                                                  • The cautious: tools and advice welcome
                                                                                                                                                                    • Figure 37: Barriers to pension pot consolidation, by willingness to engage with Pensions Dashboards, March 2019
                                                                                                                                                                  • People more likely to have one main barrier
                                                                                                                                                                    • Figure 38: Repertoire of barriers to pension pot consolidation, March 2019
                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                    • Abbreviations
                                                                                                                                                                      • Consumer research methodology
                                                                                                                                                                        • CHAID analysis methodology
                                                                                                                                                                          • Figure 39: Willingness to join a Pensions Dashboard – CHAID – Table output, March 2019
                                                                                                                                                                          • Figure 40: Willingness to join a Pensions Dashboard – CHAID – Table output, March 2019
                                                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                                                        • Forecast methodology
                                                                                                                                                                            • Figure 41: Best- and worst-case forecast of the volume of new workplace pension contracts, 2019-24

                                                                                                                                                                        Workplace Pensions - UK - June 2019

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