Five Factors that will shape the future of the UK Pensions Market

Publication Date	August 2006
Publisher	Datamonitor
Product Type	Report
Pages	9
ISBN Number	not applicable
Product Code	DAT00424

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Summary

Introduction

The pensions market in the UK is undergoing a period of immense upheaval, with Government regulation re-shaping the market. This brief examines the outlook for the pensions market and gives predictions for the future shape of the industry from the point of view of both providers and distributors.

Scope

Identifies five key factors that will be key to the structure of the pensions market over the next ten years.
Provides Datamonitor's forecasts for the future of key products in the UK pensions arena
Examines the issues facing providers and distributors of pensions and identifies how they can position themselves to take advantage of the changes

Highlights

Even by the most conservative estimates, by 2050 the ratio of 65+ year olds to 20-64 years olds will increase from 27% to 48%, with even larger growth in disparity predicted by some.

SIPPs are set to be a key pension product in the future. Datamonitor forecasts that by 2010 SIPP sales will reach 516m.

Both providers and distributors need to rethink their customer offerings in order to fit in with the challenges of the new pension landscape.

Reasons to Purchase

Understand the main challenges facing the UK pensions market over the coming years.
Learn about Datamonitor's forecasts for key pensions products.

Content

Catalyst
Summary
Methodology
Analysis
- The UK pensions market is unsustainable in its current form therefore major reforms are being introduced
- The percentage of the population aged over 65 is forecast to double by 2050
- Investment in private pensions has fallen
- Consumers have demanded an end to the growing disparity between earnings and retirement income.
- The Pension's industry will develop its products and services and take some responsibility for the future sustainability of the market
- Product structure and focus needs to change to cater for the shifting demographic
- The increase in popularity of products such as SIPPs will provide a boost to the market
- The new pensions regime will mean the role of distributors evolving to meet the new needs of customers
- IFA sales of pensions to lower end income bands will fall
- High net worth and upper mass affluent customers will become even more of a focus for IFAs
- Non-pension savings products will grow in popularity
- Opportunities exist for banks to develop their pensions advice offering
- Legislation will be put in place to limit the ability of future Governments to change the structure of the pensions reform
- Current and future Governments are needed to stick with the strong reforms suggested
- An Independent body will be put in place to take charge of pensions reviews
- IFAs will play a more significant role in policy making and the decision process
- NPSS will have a significant impact however Datamonitor forecasts that by 2020 just 60% of employees will be served by the scheme
- Despite the auto-enrollment element there will be a substantial proportion of workers who opt out of NPSS
- Having a single scheme from one provider will not significantly reduce levels of churn
- Private pensions will also be needed to supplement this basic level of income
- The implication of this is that NPSS may not have the "market-altering" impact that was initially predicted
Appendix
- Definitions
- Personal Pensions
- Stakeholder Pensions
- Group personal pensions
- SIPPs (Self Invested Personal Pensions)
- Further reading
- Datamonitor Consultancy
- Ask the analyst