Preparing for the National Pension Savings Scheme - UK - April 2008

Table of Contents

• Issues in the Market
• Key issues
• Market definitions
  • Figure 1: Types of private pension provision in the UK
• Occupational schemes
• Individual pensions
• Benefit structures
• Abbreviations
• Market in Brief
• Radical new plans proposed
• So who are the proposals aimed at?
• Impetus for the reforms
• For and against
  • Figure 2: Positive and negative implications of the NPSS
• Financial impact on SMEs
• So what do consumers think of the plans?
• Reasons for opting out
• Broader Market Environment
• Key points
• The demographic time bomb
• The longevity risk
  • Figure 3: Cohort life expectancy at age 60, by gender, 1981-2054
• Old age dependency ratio forecast to rise to 45% by 2044
  • Figure 4: Projected size of the UK population, by age band, 2007-44
• Job mobility has increased, while job stability has lessened
• Greater onus on saving on the run up to the scheme' s introduction
  • Figure 5: Total personal disposable income (PDI), consumer expenditure and savings, 2003-12
• Internal Market Environment
• Key points
• Employer support for pensions has declined
  • Figure 6: Trends in occupational scheme coverage, by gender and working status, 1989-2006
• Affordability is top reason for lack of pension savings
  • Figure 7: Reasons for not saving in a pension, November 2006
• Cost matters
• Past mistakes still undermine trust in the industry
• Constant change weakens confidence
• Apathy reigns
• Some employees shun the company scheme
• People are most likely to equate pensions with ' a comfortable retirement'
  • Figure 8: Words and phrases associated with pensions, by pension members and NPSS targets, December 2007
• Scheme Outline
• Key points
• So what' s proposed?
• Measures to support existing arrangements
• Qualifying schemes
• Delivered in three stages
• Positive ramifications
• Points of contention
• What pension providers have said about the scheme
• Counting the Costs
• Key points
• 1.2 million private-sector employers in the UK
  • Figure 9: Number of private-sector enterprises, employees and turnover -- UK, by size band, 2006
• The financial impact -- smallest firms will be hit the hardest
  • Figure 10: Estimated costs for small firms at 2007/08 prices
• Dispute over the ' real' cost to employers
• The money has to come from somewhere
• Auto-enrolment: suitable for all?
• PADA consult on the charging structure
• Strengths and Weaknesses
  • Figure 11: The pensions industry and personal accounts -- SWOT analysis, 2008
• The Size of the Target Market
• Key points
• Potentially 9 million enrolled
  • Figure 12: The size of the NPSS target market, 2007 and 2012
• Exemptions
• Profile of the Target Market
• Key points
• Two thirds of the target group are aged 22-44
  • Figure 13: Penetration and profile of NPSS targets, by gender, age, socio-economic group, lifestage and marital stage, December 2007
• Most NPSS targets are in the low-to-mid income range
  • Figure 14: Penetration and profile of NPSS targets, by tenure, working status, household income, ACORN category and region, December 2007
• More than two thirds of the target audience are Internet users
  • Figure 15: Penetration and profile of NPSS targets, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage December 2007
• Competitive Context
• Key points
• Occupational pension schemes
• Private-sector schemes in decline
  • Figure 16: Number of occupational pension schemes in the UK, by sector, 2000, 2004 and 2006
• Data illustrate reduced employer support for pensions
• Participation in context
• DC schemes far outnumber DB
  • Figure 17: Number of open and closed private-sector single-section schemes, by benefit structure and size band, 2006
• Multi-section schemes
• Active membership in the private sector has steadily fallen
  • Figure 18: Number of occupational scheme members, by sector, 1991, 1995, 2000, 2004 and 2006
• Two thirds of private-sector members are men
  • Figure 19: Proportion of active members, by gender and sector, 2006
• Current framework for workplace pensions
  • Figure 20: Types of workplace pension, 2007
• Size of the insurance-administered sector
  • Figure 21: Insurance-administered occupational and individual pension business in force, by product type, 2003-06
• The Main Pension Providers
• Key points
• Impact on the pensions industry
• Current competitive environment
• Standard Life topped the pension provider rankings in 2006
  • Figure 22: Top ten pensions providers by APE, 2006
• Advice Sources and Product Delivery
• Key points
• Intermediaries dominate the sale of insurance-administered schemes
• In-house run schemes also make use of advisers
• Non-pension members are more likely to trust friends and family than an IFA to give them good pensions advice
  • Figure 23: Most trusted sources of pensions advice, December 2007
• The Consumer -- Pension Participation
• Key points
• About Mintel' s consumer survey
• Less than half of all non-retired adults are contributing to a pension...
  • Figure 24: Proportion of adults who are active members of a pension, by type, December 2007
• ...and this proportion appears to have declined
  • Figure 25: Proportion of adults who are active members of a pension, by type, April 2006 and December 2007
• Gender gap has narrowed
  • Figure 26: Pension ownership by gender, age, socio-economic group and working status, December 2007