The way in which consumers live and work is changing and these factors are influencing which features people need from a pension. The government is responding to social change with proposals for later retirement and automatic enrolment of employees into a National Pension Savings Scheme (NPSS) from 2012. Changes at the national level are needed in order to manage the existing and continuing liability of the state pension and to address the existing ' savings gap'

This report covers developments in the personal and stakeholder pensions sectors in the last 12 months. Through scrutiny of official data, and examination of pensions legislation and regulations, this report shows the key drivers for pensions. Moreover, Mintel examines the competitive context for pensions in an economy with a booming housing market and with consumers now turning more towards repaying accumulated debt.

• Issues in the Market
• Key Issues
• Abbreviations
• Market in Brief
• New business invigorated by pensions reform
  • Figure 1: Value of new individual pensions business, 2002-06
• Lloyds TSB Group was the largest individual pensions provider
• High-altitude trends in pensions
• Baby Boomers boom
• Rising interest rates have a bearing on consumer ability to save
• Pensions providers bid for NPSS work
• Competitor sectors grow
• Consumers are still wary of investing in pensions
• Green issues and new technology
• The majority of regular contributions are under £100 per month
• Broader Market Environment
• There will be increasing pressure on consumers to invest
  • Figure 2: Population growth projections, by age, 2004-29
• Ageing population affecting wide range of services
• Strong earnings results have underpinned growth in the stock market
  • Figure 3: FTSE 100 and FTSE All Share indices, January 1996-December 2006
• Base rate changes cause some consumers to examine their finances
  • Figure 4: Base rates, January 1992-January 2007
• PDI on the up
  • Figure 5: Personal disposable income, consumer expenditure, savings and the savings ratio, 2001-11
• Internal Market Environment
• Pensioners subsidise their lifestyle
  • Figure 6: Basic state pension entitlement, 2006/07
• S2P replaces SERPS
• 2012 will be a year of change for pensions
• 6.3 million personal pension members are in non-employer-sponsored schemes
  • Figure 7: Number of personal pension members, by type of scheme, 2005/06
• There were 1.7 million stakeholder pension members in 2005/06
  • Figure 8: Number of stakeholder pension members, by type of scheme, 2005/06
• The number of occupational pension schemes has reduced rapidly
  • Figure 9: Number of private sector occupational pension schemes, by scheme size, 2001-05
• 11 million consumers may benefit from the NPSS
  • Figure 10: Model of the pensionable population, 2004
• Providers bid for NPSS work
• Integration of Europe' s financial markets
  • Figure 11: European timetable for MiFID, June 2006-November 2007
• The Regulatory Environment
• Personal pensions
• Encouraging investment in pensions through simplification
  • Figure 12: Pensions lifetime allowance and pensions annual allowance, 2006/07-2010/11
• Phased income drawdown and phased annuities
• Improved outcomes for consumers
• NPSS, and what it means for the pensions industry
• Free financial advice for consumers
• New legislation for pensions in 2008
• Competitive Context
• Servicing debt is a high priority for consumers
• ISAs offer a low-risk and limited commitment tax-free savings option
  • Figure 13: Number and value of ISAs, 2001/02-2005/06
• Property is perceived as a good investment
  • Figure 14: House prices in England and Wales, 1970-2006
• Equity release grows more appealing
  • Figure 15: Equity release, number of mortgage balances outstanding, 2002-06
• Strengths and Weaknesses in the Market
• Demand for pensions will increase
  • Figure 16: Strengths and weaknesses for the personal pensions market, February 2007
• The notion of equity release has grown more popular among consumers
• Market Size and Forecast
• New premiums have increased markedly across all sectors
  • Figure 17: Value of new individual pensions business, by product type, 2001-06
  • Figure 18: New individual pensions premiums, by product type, 2001-06
• Increase in single-premium business
  • Figure 19: Total new premiums, all individual pensions, 2001-06
• The average contribution to a personal pension has increased
  • Figure 20: Average contributions to regular-premium individual pension schemes, Q3 2005 and Q3 2006
• Single-premium investment has increased in some quarters
  • Figure 21: Average contributions to single-premium individual pension schemes, Q3 2005 and Q3 2006
• Contributions from the self-employed tend to be higher
  • Figure 22: Personal and stakeholder pensions, average annual contribution, by employment status and earned income, 2005/06
• Renewed interest in standard personal pensions
  • Figure 23: New business, standard personal pensions, 2001-06
• Single-premium stakeholder pension business has fared best
  • Figure 24: New business, stakeholder pensions, 2001-06
• New business returns to pre-A-day levels
  • Figure 25: Forecast for value of personal and stakeholder pensions (current prices), 2001-11
• Factors used in the forecast
• Market Share
• Prudential was the top personal pensions provider in 2005
  • Figure 26: Personal pensions providers, 2004 and 2005
• Lloyds TSB Group was the largest individual pensions provider in 2005
  • Figure 27: Ranking of individual pensions providers, based on UK NWPs, 2003-05
• Companies and Products
• Fund performance varies markedly among providers
  • Figure 28: Best-performing unit-linked and with-profits pensions, January 2007
• Lloyds TSB Group
• Standard Life
• AVIVA plc
• AXA
• AEGON
• Brand Communication and Promotion
• Adspend on the up
  • Figure 29: Pensions advertising expenditure, by type of scheme, 2001/02-2005/06
• Newspaper advertising is favoured by individual pensions providers
  • Figure 30: Individual pensions advertising expenditure, by outlet, 2005/06
• Norwich Union Life Insurance is the top individual pensions advertiser
  • Figure 31: Top 20 individual pensions advertisers, 2005/06
• Channels to Market
• The cost of maintaining a salesforce favours IFAs
  • Figure 32: Distribution of new individual personal pensions, Q1-Q3 2006
• Pre-A-day demand for independent advice increased
  • Figure 33: Distribution of standard personal pensions, Q1-Q3 2006
• Nowadays stakeholder advice is for more affluent people
  • Figure 34: Distribution of individual stakeholder pensions, Q1-Q3 2006
• The Consumer -- Pension Ownership
• Occupational pensions are most common type held among consumers
  • Figure 42: Pension ownership, November 2006
• A cash incentive could be the root to success
• The need to save for retirement grows more pressing with age
  • Figure 43: Pension ownership, by gender, age, socio-economic group and marital status, November 2006
• Implications and opportunities
• Consumer trust toward providers is still low
  • Figure 44: Pension ownership, by lifestage, age/socio-economic group, working status and tenure, November 2006
• Implications and opportunities
• Green pensions may appeal to consumers
  • Figure 45: Pension ownership, by gross annual household income, region and ACORN category, November 2006
• Implications and opportunities
  • Figure 46: Pension ownership, by newspaper readership, technology users, commercial TV viewing and supermarket usage, November 2006
• Implications and opportunities
• The Consumer -- Level of Regular Investment
• Most pension holders contribute a modest amount
  • Figure 47: Level of pension contribution, November 2006
• Younger adults have more pressing concerns than a pension
  • Figure 48: Level of pension contribution, by gender, age, socio-economic group, marital status and lifestage, November 2006
• Implications and opportunities
• A stark choice between a home or a pension
  • Figure 49: Level of pension contribution, by age/socio-economic group, working status, gross annual household income and tenure, November 2006
• Implications and opportunities
• Mid-market tabloids are on the level
  • Figure 50: Level of pension contribution, by technology users, newspaper readership, commercial TV viewing and supermarket usage, November 2006
• Implications and opportunities
• GPPs draw a relatively high level of regular investment
  • Figure 51: Level of pension contribution versus pension ownership, November 2006