The Future of the UK Occupational Pensions Market

Content

• Chapter 1 Executive Summary
  • Introduction
  • The UK occupational pensions market is moving away from its focus on defined benefit schemes
  • Defined contribution schemes made up the largest proportion of occupational pension inflows in 2005
  • The future for Executive Plan Pensions (EPP) looks uncertain
  • SASSs remain a small part of the Occupational Pension market
  • New business into all AVC products has fallen significantly over the last 5 years
  • The total occupational pensions market in the UK is forecast to decline
  • Occupational pension providers and pension fund managers are facing a period of major upheaval in their market
  • Companies moving from DB to DC schemes face new challenges
  • The pension protection fund should boost confidence in defined benefit schemes
  • Effective asset management is vital for pension funds
  • Conracting out of the S2P is growing in popularity
  • Outsourcing of pensions administration is growing in popularity
• Chapter 2 Introduction
  • The UK occupational pensions market
  • Employers' preferences have shifted away from defined benefit and towards defined contribution schemes
  • Advantages of defined benefit schemes
  • Disadvantages of defined benefit schemes
  • Advantages of defined contribution schemes
  • Disadvantages of defined contribution schemes
• Chapter 3 Occupational Pensions - Market Context
  • Introduction
  • Key findings
  • The UK occupational pensions market is comprised of six key products
  • In 2005 inflows into life company occupational pensions market were 982m APE
  • Defined benefit schemes are being replace by defined contribution occupational pension schemes
  • What are defined contribution and defined benefit Schemes?
  • Both employer and employee contributions to pension funds have risen substantially over the last 5 years
  • The vast majority of employer contributions are made to defined benefit schemes
  • Specialist occupational pension products for wealthy customers have been declining in popularity
  • The future for Executive Plan Pensions looks uncertain
  • What are Executive Plan Pensions (EPPs)?
  • EPPs appeal primarily to Senior Managers and Controlling Directors
  • EPPs compete with SSASs for pension funds from controlling directors
  • Insurers dominate the market for EPPs
  • EPPs gained some new business in the run-up to simplification but their long-term future is bleak
  • EPPs will see a fund drain post-simplification
  • Insurance companies have pulled out of administrating EPPs
  • SASSs remain a small part of the Occupational Pension market
  • The SASS market is dominated by regular premium products
  • Uncertainty currently surrounds SSASs due to loopholes in regulation
  • Additional Voluntary Contributions - is there still a place for them?
  • New business into all AVC products has fallen significantly over the last 5 years
  • Has A-day made FSAVCs and AVCs obsolete?
• Chapter 4 What Is The Future Of The Occupational Pensions Market?
  • Key findings
  • The total Occupational Pensions market in the UK is forecast to decline
  • Defined contribution pensions will remain the main source of business inflows in the occupational market
  • Inflows into defined benefit schemes will continue to decline
  • EPPs will lose new business to SIPPs and Personal Pensions post-Simplification
  • Group AVCs will gain benefits post-simplification, while FSAVCs will merge into the personal pensions market
  • Occupational pension providers and pension fund managers are facing a period of major upheaval in their market
  • Companies moving from DB to DC schemes face new challenges
  • Maintaining the existing DB arrangement and maximising benefits for members
  • The pension protection fund should boost confidence in defined benefit schemes
  • Effective asset management is vital in the pension fund market
  • The ability to maximise returns over a long time frame
  • A strong team is needed to support the investment manager
  • Trustees often do not know enough to effectively choose investment teams
  • Default funds are becoming increasingly inappropriate
  • Are default funds useful for defined contribution schemes?
  • The concerns over default funds are applicable to the arguments over NPSS provision
  • Conracting out of the S2P is growing in popularity
  • Increased flexibility of transfer payments
  • Distribution opportunities exist through the use of larger IFA firms and employee benefit consultants
  • Outsourcing of pension administration is growing in popularity
  • Technology and third-party administration
  • Is there a future in offering flexible benefits?
  • How has A-day effected third-party administration?
• Chapter 5 Appendix
  • Supplementary data
  • Definitions
  • Additional Voluntary Contributions (AVCs) and Free-Standing Additional Voluntary Contributions (FSAVCs)
  • Controlling directors
  • Defined benefit schemes
  • Defined contribution schemes
  • Executive Plan Pensions (EPPs)
  • High net worth (HNW)
  • Free Standing Additional Voluntary Contributions (FSAVCs).
  • Funded Unapproved Retirement Benefit Schemes (FURBs):
  • Mass affluent
  • Mass market
  • Personal Pension
  • Self Invested Personal pensions (SIPPs)
  • Small Self Administered Schemes (SSAS)
  • Section 32 Transfers
  • State Second Pension (S2P)
  • Unfunded Unapproved Retirement Benefit Schemes (UURBs)
  • Vest
  • Research methodology
  • Life and pensions forecasting
  • Regressional analysis is unsuitable for Life and Pensions forecasting
  • Datamonitor uses a qualitative forecasting methodology for Life and Pensions
  • Future readings
  • Life and pensions
  • Interactive Databases
  • Reports and Briefs
  • SPP writing team
  • How to contact experts in your industry
• List of Tables
  • Table 1: New business premiums in insurance company occupational pension schemes m APE
  • Table 2: Employer and employee contributions to pension funds 2001-2005, bn
  • Table 3: New business premiums into insured EPP funds m APE
  • Table 4: New business premiums in insured SSASs, m APE
  • Table 5: New business premiums in Group AVCs and FSAVCs, m APE
  • Table 6: Forecast new business premiums in the occupational pensions market m APE, 2006-2010
  • Table 7: Forecast new business premiums in the UK group pensions market, m APE
• List of Figures
  • Figure 1: The choices available to companies in terms of pension provision for their employees
  • Figure 2: Inflows into defined contribution schemes made up 57% of the insured occupational pensions market in 2005
  • Figure 3: Employers' contributions to pension funds have grown substantially over the last 5 years
  • Figure 4: Employer contributions to occupational pensions, split by DB, DC and Hybrid schemes
  • Figure 5: Regular premiums dominate the EPP market
  • Figure 6: The SSAS market is dominated by regular premium products
  • Figure 7: Sales across all AVC products have fallen significantly between 2001 and 2005
  • Figure 8: The UK occupational pension market is forcast to decline between 2006 and 2010
  • Figure 9: Future questions facing the occupational pensions industry
  • Figure 10: "Quasi-delphi" forecasting technique