Transcript Document

Pensions: Trends and Opportunities
Contents
Market Environment – Budget and Long Haul
Summary
Reasons for lack of growth
•The recession has led to high unemployment and squeezed disposable incomes,
prompting a reduction in pension saving.
•Alternative sectors like equity release and buy-to-let have also been hit by funding
issues and falling house prices.
•Pensions have a negative public image and are perceived by many to be risky,
complicated and expensive.
Consumer behaviour
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Many people, particularly younger adults, are apathetic when it comes to retirement planning, which is seen as being
too far away to worry about.
Affordability is a major constraint when it comes to saving in a pension, which is much more common amongst ABs
and high earners.
The situation is not good – 13% of non-retirees think they will really struggle in retirement and 23% haven’t really
thought about it.
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Influencing factors and market dynamics
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The UK has an ageing population, which will put increasing strain on the state pension.
Consumer apathy towards retirement planning and a lack of adequate pension contribution are
likely to force more people to either postpone, or work during their retirement, as well as
consider alternative retirement solutions like equity release.
The continued closure of final-salary schemes in the private sector has put added pressure on
people’s retirement plans, as they are transferred on to less generous individual/definedcontribution schemes.
The UK officially emerged from recession in Q4 2009, but the economy remains fragile and the
budget deficit raises the prospect of public spending cuts and tax rises this year.
PDI is the biggest driver of the retirement savings market, and although growth is likely to
remain subdued in 2010, the long-term outlook is more positive, suggesting that retirement
savings will increase.
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Strengths and weaknesses…
Strengths
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Weaknesses
Over the long-term, the UK population is growing in wealth and affluence…
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The government is desperately trying to incentivise and encourage people to
save for retirement.
•
Tax relief on pension contributions is a major attraction for investors to save for
retirement this way.
•
ISAs are very flexible and withdrawals are not taxed, with higher limits likely to
increase the appeal of ISAs as a means of saving for retirement.
•
As a non-pension alternative, collectives enable investors to diversify and
spread risk.
•
The recent rally in the stock market may encourage more people to invest in
equities, which generally deliver better returns over the long-term.
•
Strong growth in house prices over the last decade has made property an
attractive investment for many people, especially BTL investors…
•
Now that economic conditions are improving, it is likely that retirement savings
and pension contributions will be back on the list for many people.
•
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
…but the recession has forced many people to focus on paying off debt and
cut back on saving.
People are apathetic when it comes to thinking about retirement, especially
young people.
The majority of the population are not willing to take on any risk (ie stock
market-based investment).
The continued closure of final salary schemes in the private sector and the
movement to less generous DC schemes has led to a fall in contribution levels.
Pensions are tightly regulated, which limits the opportunity for product
development.
Pensions are perceived to be complicated, risky and expensive, with many
consumers not trusting pension companies due to past mistakes.
…although BTL mortgage availability has been severely reduced by the
recession, due to tighter lending criteria and a lack of available funding.
Equity release firms have received a bad press in recent years for deliberately
undervaluing properties and failing to honor agreed habitation rights.
…opportunities and threats
Opportunities
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•
•
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Possible reform to the CGT regime may make pensions more
attractive to investors…
The launch of the NEST scheme in 2012 will increase pension
participation and should raise the profile of pensions and
saving for retirement…
Due to a lack of adequate pension savings, in the future,
people are likely to be more dependent on their homes to
provide them with an income when they retire.
The RDR aims to improve standards of advice and reduce
adviser bias, which may encourage more consumers into longterm saving and investing…
Increased longevity and a decline in employer pension
provision means people will have to save more funds for
retirement themselves in future, creating an opportunity for all
providers of retirement planning products.
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Threats
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…but changes to tax relief on pension contributions for high
earners may discourage investment at the top-end.
…but people may rely too much on the NEST, and there is also
the risk that employers may level down to this scheme from
existing, more generous ones.
An ageing population and increased longevity has put more
strain on the state pension and means people will need to save
higher sums in order to retire.
…but the proposals are likely to be difficult and costly to
implement, and are likely to push independent advice out of
reach for the most people.
Given the difficulty for young people of getting onto the
property ladder, achieving this is a higher priority for many
individuals than saving for retirement.
BTL mortgages look likely to be regulated in the future, which
may reduce availability and push up costs.
Less than two fifths of non-retired adults have a
pension
All adults
Non-retired
adults
%
%
62
59
Savings account/cash ISA
59
56
National savings and investments products
19
16
24
21
17
15
Stockmarket-based investments held outside an ISA
9
8
Investment bond from a life company (eg with-profits bond)
6
5
41
37
Final salary company pension scheme
24
20
Standard personal pension/stakeholder pension
15
14
Money-purchase company pension scheme
6
6
GPP
4
4
SIPP
1
2
12
13
Own/family business
5
6
Buy-to-let property
3
4
Other investments/assets
7
7
23
27
Ownership of savings, investment and pension products, March 2010
Cash-based savings
Stockmarket-based investments
Stocks and shares ISA
Any pension
Any other type of investment/asset
None of these
Base: 1,924 adults aged 18+ and 1,464 adults aged 18+ who have not retired
Source: Ipsos Mori/Mintel
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
ABs are more likely to have retirement savings
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•
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The majority of UK consumers are ill prepared for
retirement – less than two fifths of non-retired adults
have a pension and only a fifth have stock marketbased investments.
Final-salary schemes are the most common type of
pension product, owned by a fifth of non-retired
adults.
High earners, particularly those earning £40,000+, are
considerably more likely to have a pension, with
ownership levels at over two thirds of individuals.
Almost a quarter of UK adults don’t own any savings,
investment or pension products, while another quarter
own just one product.
ABs are likely to have a much wider range of options
available to them when they retire, with over half
owning three or more different savings, investment
and pension products, compared with 30% of C1s,
18% of C2s and far fewer DEs.
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Young people are apathetic towards retirement
planning
Key points
Financial expectations during retirement, March 2010
•
Base: 1,464 adults aged 18+ who have not already retired
Don’t know
3
•
None of thes e
7
I haven’t really thought about it
•
23
Things s hould be good - I expect a com fortable
s tandard of living when I retire
21
Things s houldn’t be too bad for m e, I s hould be
able to get by
33
I’ll really s truggle in retirem ent
13
0
5
10
•
15
20
%
Source: Ipsos Mori/Mintel
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
25
30
35
Around two fifths of non-retired adults plan to
retire at the state pension age, with 17%
planning to take early retirement and 12%
expecting to work past this.
High earners are considerably more likely to
plan on retiring before reaching state pension
age.
The majority of non-retired people are fairly
optimistic about their expected lifestyle during
retirement, with a third thinking they should
be able to get by and a fifth expecting a
comfortable standard of living when they
retire.
Those who are worried about their standard of
living in retirement are most likely to see
working past the state retirement age as the
solution to a savings shortfall.
Two fifths believe pensions are the best way to save
Key points
•
Attitudes towards pensions, March 2010
Base: 1,464 adults aged 18+ who have not already retired
%
Pensions are the best way to save for retirement
I am concerned about the security of my pension
Tax relief on contributions is a key reason why I choose to save in a pension
I would not consider investing in a pension until the economy improves
I think now is a good time to review my pension arrangements
It’s a good time to invest in a pension
I’ve recently stopped paying into my pension or reduced my pension contributions
38
18
11
10
9
6
6
None of these
Don’t know
24
9
•
•
•
Source: Ipsos Mori/Mintel
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Pensions are the most popular method of
saving for retirement, with around two fifths of
non-retired adults believing that pensions are
the best way to save for retirement.
Tax relief on pension contributions is valued
more by ABs, while 35-54-year-olds are the
most likely to think now is a good time to
review their pension arrangements.
People with non-stock market-based
investments/assets are less likely to think
pensions are the best way to save for
retirement and are more likely to have recently
stopped or reduced their pension
contributions.
Non-retired people who expect a comfortable
standard of living when they retire are the most
positive about pensions, particularly when it
comes to tax relief on contributions.
Affordability is the biggest barrier to owning a pension
Reasons for not having a pension, March 2010
%
I can’t afford to
I never really considered it before
Retirement is just too far away for me to worry about now
I don’t trust pension companies
I want to, I’ve just never got around to it
It’s all just too confusing
I wouldn’t want to trust my retirement savings to the stock market
I don't like the idea of being forced to lock the money away until I retire
26
15
11
8
6
5
4
3
None of these/other reasons
Don’t know
33
8
Base: 1,140 adults aged 18+ who do not have a pension
Source: Ipsos Mori/Mintel
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Key points
• Affordability is the main barrier to wider
pension participation, with a quarter of
non-pension holders saying they can’t
afford to contribute to one, rising
considerably amongst those earning less
than £25,000.
• Some 15% of non-pension owners say
they’ve never really thought about
saving in a pension before, while 11%
say retirement is too far away for them
to worry about now – in both cases
responses were much higher for
younger adults.
• There are signs that a lack of trust is
leading some people to avoid the
pensions industry altogether.
It’s all about leaving a legacy versus living for
today…
Attitudes towards retirement and retirement planning in general, February 2010
Base: 1,464 adults aged 18+ who have not retired
%
I want to leave a legacy for my children when I die
I’d rather live for today than worry about what might or might not happen in 20 or 30 years time
My priority is getting onto/moving up the property ladder, not saving for retirement
I don’t like the thought of tying my retirement savings up in a pension
The state pension will be enough for me to get by on when I retire
I don’t see the need to save vast sums for retirement when my house will be worth so much by then
I think I’ll be quite dependent on my children/other relatives when I retire to help me get by
25
24
15
9
8
5
3
None of these
Don’t know
23
9
Source: Ipsos MORI/Mintel
•There is a difference in opinion as to the types of attitudes
that consumers have today concerning retirement
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Everyday expenses are the main barrier to
saving activity
Main barriers to saving and investing, December 2010
Base: internet users aged 16+
I don’t have any money left after essential bills and expenses
Low interest rates
I am concentrating on repaying debts
I enjoy life and don’t want to make cutbacks
I prefer to keep any extra funds in my current account
Spending is just more fun
I don’t want my savings to restrict any state benefits I do/may receive
None of these
All adults
2,000
%
42
21
19
14
13
6
2
16
Source: GMI/Mintel
“Unfortunately my main priority is everyday living and my family such as paying the
mortgage bills etc. At this time of year especially saving is not high on the list.”
– 45-54-year-old ABC1 female
“I think savings are very important if you can spare the money to put away but my
priorities are making sure all my bills are paid and everything I want to buy is paid for.”
– 45-54-year-old C2DE female
© 2010 Mintel International Group. All rights reserved. Confidential to Mintel.
Consumer Trends
“For which of the following reasons do you think you will work beyond the statutory
retirement age?”
% who name the following reasons
0%
10%
20%
30%
40%
For financial reasons
As a way to remain active
I worry that I will be bored if I
stop working
Enjoy social contact
I enjoy working
Feel that I will still have
something to contribute
Enjoy the routine of work
None of these
Source: Friends Provident/The Future Foundation/nVision
Base: 376 respondents aged 16+ not retired who say they will continue working after retirement age, GB, 2010
50%
60%
70%
80%
“How are you funding/do you intend to fund your retirement?”
0%
10%
20%
30%
40%
50%
60%
70%
State pension
Through savings
Through my employer pension
Through my personal pension
By continuing to work part-time
Through shares/investments
Through selling / down-sizing my house
By continuing to work full-time
I will release equity from my property
The new state pension scheme (National Employment
Savings Trust)
Other
Don't know
Source: Friends Provident/The Future Foundation/nVision
Base: 1,005 respondents aged 16+, GB, 2010
Most consumers will
depend on the state for
their pensions
“The government will provide me with an adequate level of pensions
/ retirement savings for my retirement”
By gender, age and social grade
Agree strongly
Agree
Neither agree nor disagree
Disagree
Disagree strongly
100%
90%
80%
70%
However they do not feel
that it will be adequate for
their needs
60%
50%
40%
30%
20%
Source: Friends Provident/The Future Foundation/nVision
Base: 1,005 respondents aged 16+, GB, 2010
DE
C2
C1
AB
65+
55-64
45-54
35-44
25-34
16-24
Female
Male
0%
Total
10%
“I find pensions schemes confusing”
By gender, age and social grade
Strongly agree
Agree
Neither agree nor disagree
Disagree
Strongly disagree
100%
90%
80%
70%
60%
And they are confusing
50%
40%
30%
20%
Source: Friends Provident/The Future Foundation/nVision
Base: 1,005 respondents aged 16+, GB, 2010
DE
C2
C1
AB
65+
55-64
45-54
35-44
25-34
16-24
Male
Total
0%
Female
10%
How confident are you of achieving the financial situation in your retirement that you
would like?
Level of confidence, by gender, age and social grade
100%
Don't Know
90%
80%
Not at all
confident
70%
60%
Not very
confident
50%
40%
Quite
confident
30%
20%
Very
confident
C2DE
ABC1
55+
45-54
Female
Male
0%
Total
10%
Source: Friends Life/The Future Foundation/nVision
Base: 275 online respondents who have not yet reached retirement aged 45+, GB, 2011
26803: Graphics from nVision for gabe
Social contributions to funded pensions by the household sector
In £billions
60
50
40
30
20
Contribution dependency is
shifting more onto employers
Employees
10
Employers
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
0
Source: ONS/nVision
Base: UK
26828: Graphics from nVision for gabe
Advertising Climate
Search
Bing Search Traffic KPIs
•
Overall, pensions and investment KWs have decreased by 3% year on year for 2011
•
Looking more specifically at pensions, there has been a similar amount of traffic year
on year
•
There has also been a slight decrease in investment specific KWs by 4% in 2011 year
on year
1.
Microsoft Advertising Intelligence Tool
Search
Pensions KW Demographics and Daily Trends: Bing
•
163% more during the week than weekend
•
There is a slight bias towards male searchers; traffic peak in the 50-64 age brackets
1. Microsoft Advertising Intelligence Tool
Search
Opportunities
There is a build of Impressions and Actions during the early afternoon and a slight
elevation in the early evening
There are two main peaks that occurs post-lunch before the end of the work day and at the
end of the evening
Targeting options could
include the during and
post-lunch targeting to
hit the break browsers
Activity ramps up quickly
during the start of the
work day and maintains
levels until evening
Consumers are most active
during the evening