Group Personal Pensions - UK - December 2007

Table of Contents

• Issues in the Market
• Key issues
• Definitions
• GPPs -- an alternative to an occupational pension scheme
• Significant benefits for employers
• Advantages over group SHPs and GSIPPs
• Market in Brief
• Market size and development
  • Figure 1: New GPP business, 2001-07
• Regulation driving development
• Longevity -- the burning issue
• A competitive marketplace
• Innovation focused on high-end GSIPPs
• Market shares, companies and products
• Little direct advertising activity
• Employee benefit consultants increase their role
• Consumer understanding limited
• Mistrust still an issue
• Internal Market Environment
• Key points summary:
• Regulation is the biggest influence on market development
• Stimulating pension saving through simplification
• Fair play?
• The advent of the NPSS
• Free advice for consumers
• More pensions legislation in 2008
• Twice as many consumers with individual personal pensions rather than employer sponsored
  • Figure 2: Number of personal pension members, by type of scheme, 2006/07
• The number of occupational pension schemes has declined rapidly since 2001
  • Figure 3: Number of private sector occupational pension schemes, by scheme size, 2001-05
• The role of trustees
• GPPs have become more competitive but less profitable
• Take-up and persistency
• Changing priorities?
• So why not stakeholder instead?
• And then along came GSIPP
• Hybrid schemes may be the answer
• GPPs the solution of choice in 2007
• New threats on the horizon
• Broader Market Environment
• Key points summary:
• Increasing longevity still the key market driver
  • Figure 4: Projected size of the UK population, by age band, 2007-44
• Savings set to rise
  • Figure 5: Total PDI*, consumer expenditure and savings, 2003-12
• Employment patterns will influence potential for pension saving
• Competitive Context
• Key points summary:
• Pensions and pension substitutes
• Non-pension options
• Strengths and Weaknesses in the Market
• Market Size and Forecast
• Key points summary:
• Trusteeship has driven GPP sales upwards
• Resurgence in GPP business in force
  • Figure 6: GPPs in force, 2001-06
• New GPP soars to record levels
  • Figure 7: New GPP business, 2001-07
• Transfers currently account for three quarters of new single premiums
  • Figure 8: Single premium GPPs and transfers, 2006-07
• Making good pension deficits
  • Figure 9: Contributions to private pension schemes -- UK, 2001-06
• New insurance-administered occupational business steady in 2007
  • Figure 10: New insurance-administered occupational pension business, 2001-06
• Individual new business takes up the slack
  • Figure 11: Total new premiums, all individual pensions, 2002-07
• GPPs to continue to benefit from restructuring of the pension sector
  • Figure 12: Forecast of new GPP business, 2002-12
• Factors used in the forecast
• Segment Performance
• Key points summary:
• Surge in transfers boosts single premium business
  • Figure 13: GPPs in force, by type of policy, 2001-06
• Market Share
• Key points summary:
• AXA and Standard Life replace Lloyds TSB and Aegon at top of individual pensions market
  • Figure 14: Leading providers of individual pension products, 2005-06
• Occupational pension performance is also important
  • Figure 15: Top 20 insurance companies in the occupational pensions market, by net premiums, 2004 and 2005
• Companies and Products
• Key points summary:
• A fragmented sector in a concentrated market
• Prudential
• Legal & General
• Standard Life
• AXA
• Norwich Union
• Friends Provident
• Brand Communication and Promotion
• Key points summary:
• A note about the data used in this section
  • Figure 16: Pensions adspend, by category, 2003-07
• GPPs -- little scope for direct advertising
• Focus for company pensions is on the trade press
  • Figure 17: Company/occupational pension scheme adspend, by outlet, 2003-07
• Provider and scheme ad spend falls after A-Day
  • Figure 18: Company/occupational pension scheme ad spend, by provider, 2003-07
• Advertising likely to grow in the future
• Channels to Market
• Key points summary:
• Independents -- not just IFAs
  • Figure 19: GPP business by distribution channel, 2002-06
• Advice potential in GPP is huge
• One-to-one surgeries boost take-up
• Long-term benefits would flow
• The Consumer -- Market Context and Pension Ownership
• Key points summary:
• Company size is key
  • Figure 20: Size of company worked for, September 2007
• Type of pension offered influenced by size of company
  • Figure 21: Pension ownership, by size of company worked for, September 2007
• Pension ownership
  • Figure 22: Pension ownership, September 2007
• Pensions ownership male-focused and upmarket
  • Figure 23: Pension ownership, by gender and socio-economic group, September 2007
• Pension ownership peaks among 35-54s
  • Figure 24: Pension ownership, by age and lifestage, September 2007
• Part-time workers less likely to have pension arrangements
  • Figure 25: Pension ownership, by special group and working status, September 2007
• The higher the income group the greater the likelihood of owning a pension
  • Figure 26: Pension ownership, by household income, September 2007
• Personal pensions are mid-market products
  • Figure 27: Pension ownership, by housing tenure and newpaper readership, September 2007
• Personal pension ownership higher in London than elsewhere
  • Figure 28: Pension ownership, by region, September 2007
• All forms of pension ownership associated with attainment of higher education
  • Figure 29: Pension ownership, by terminal age of education, September 2007
• The Consumer -- Attitudes Towards Pensions
• Key points summary:
• Company contributions are a major influence on participation
  • Figure 30: Attitudes towards company pensions among scheme members, September 2007
• Availability of a pension scheme may be of declining importance in employment decisions
  • Figure 31: Attitudes towards company pensions among scheme members, by gender and age, September 2007
• Mid-market and pre-/no family plan holders have differentiated views
  • Figure 32: Attitudes towards company pensions among scheme members, by affluence and lifestage, September 2007
• Third-age ABC1s see much change
  • Figure 33: Attitudes towards company pensions among scheme members, by special group and working status, September 2007
• Higher-earning scheme members most likely to value pensions
  • Figure 34: Attitudes towards company pensions among scheme members, by income and housing tenure, September 2007
• Broadsheet readers are ' traditional' scheme members
  • Figure 35: Attitudes towards company pensions among scheme members, by media usage, September 2007
• Attitudes among non-members
  • Figure 36: Attitudes towards company pensions among non-members, September 2007
• Men are much more negative about pension schemes than women
  • Figure 37: Attitudes towards company pensions among non-members, by gender and affluence, September 2007
• Scepticism about company pensions felt by all age groups
  • Figure 38: Attitudes towards company pensions among non-members, by age and lifestage, September 2007
• Older upmarket individuals less concerned about occupational schemes
  • Figure 39: Attitudes towards company pensions among non-members, by special group and working status, September 2007
• Pensions mean more to more affluent consumers
  • Figure 40: Attitudes towards company pensions among non-members, by affluence and housing status, September 2007
• Broadsheet readers less likely to trust company pensions
  • Figure 41: Attitudes towards company pensions among non-members, by Internet usage and newspaper readership, September 2007