United Kingdom (UK) Pensions Market Analysis and Forecast to 2025 - Analysing Market by Product and COVID-19 Impact on Consumers' Attitudes and Behaviours

Table of Contents

1. Executive Summary1.1 Market overview
1.2 Key findings
1.3 Critical success factors

2. The State Pension and Retirement Planning2.1 Most adults retire once they can access the state pension
2.2 The state pension is insufficient to live comfortably on
2.3 COVID-19 and Brexit will impact retirement plans

3. Private Pensions: Market Size and Players3.1 New pension contributions plummeted amid COVID-19
3.2 BlackRock and Rothesay Life lead the market for pensions
3.3 Other market developments

4. Saving for Retirement4.1 More adults save into a workplace pension because of AE
4.2 Pension pot characteristics and saving attitudes

5. Pension Decumulation5.1 Many over 55s withdrawing from their pensions are putting at risk their long-term savings
5.2 Accessing pensions for the first time
5.3 Income drawdowns and annuities

6. Lifestyle in Retirement6.1 Retirees have confidence in their retirement funds

7. Appendix7.1 Abbreviations and acronyms
7.2 Definitions
7.3 Methodology
7.4 Secondary sources
7.5 Further reading

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List of TablesTable 1: Trust-based APE by product type (£m), 2016-20
Table 2: Individual APE by product type (£m), 2016-20
Table 3: Top 10 UK individual and workplace pension providers by GWP, 2019
Table 4: Top 10 UK trust-based pension providers by GWP, 2019
Table 5: AE thresholds, 2019-20 to 2021-22
Table 6: Total minimum contributions rose to 8% of qualifying earnings in April 2019
Table 7: Example of average retirement income through annuities, May 2019 to May 2021

List of FiguresFigure 1: The SPA will rise to 68 by 2039
Figure 2: Most individuals retire at around the SPA
Figure 3: The state pension pay of women is lower on average than for men
Figure 4: Pensioner poverty has increased in recent years and is worst among women
Figure 5: Non-retired adults place less importance on the state pension than those currently in retirement
Figure 6: Most individuals desire a retirement income of between £1,000 and £1,999 per month
Figure 7: Men want higher monthly income in retirement than women
Figure 8: Single individuals need at least £10,200 per annum in retirement to cover expenses
Figure 9: Women need larger pension pots than men to have the same income at retirement owing to their longer life expectancies
Figure 10: COVID-19 has worsened income disparities as some are better off financially while others have struggled
Figure 11: Some individuals have delayed retirement as COVID-19 caused stock markets to crash
Figure 12: APE for all pension types shrank in 2020
Figure 13: The pensions market is forecast to grow to 2025
Figure 14: Growth in workplace pension participation leveled off in 2020
Figure 15: The majority of younger adults have started a workplace pension because of AE
Figure 16: Workplace pension participation is extremely low among 16-21 year olds
Figure 17: Most individuals would never opt out of their workplace pension regardless of the contribution rate
Figure 18: There has been a shift away from DB towards DC schemes
Figure 19: Many adults consolidate their pension pots once they reach the SPA
Figure 20: 60.6% of individuals contribute at least 6% of their income to pensions
Figure 21: 78.3% of furloughed workers made contributions towards their pension above the minimum rate
Figure 22: Most employers make contributions at the minimum required level
Figure 23: A fifth of individuals hit financially by COVID-19 have reduced their contributions
Figure 24: Full-time and furloughed employees were the most likely to increase their contributions
Figure 25: Confidence as to how long pensions will last has somewhat eroded as a result of COVID-19
Figure 26: Only a small proportion of savers consciously pick the investments in their pension plan
Figure 27: Individuals lose track of how much their pension is worth over their working life
Figure 28: A significant proportion of over 55s have pension pots worth in excess of £100,000
Figure 29: The pension pots of women approaching the SPA are smaller than those of men of the same age
Figure 30: Over 55s have flexibility in terms of drawing pension income
Figure 31: Over 55s withdrawing from their pensions will commonly place the funds into a savings account
Figure 32: The main reason driving some to defer claiming a pension is so that it pays more at a later date
Figure 33: Over half of all pension plans are fully withdrawn when accessed for the first time
Figure 34: Small pension pots are generally fully withdrawn at the first time of access
Figure 35: Income drawdowns and annuity sales have fallen over COVID-19 economic uncertainty
Figure 36: The value of taxable flexible payments from pensions was higher in Q1 2021 than in the same period of 2020
Figure 37: Over nine in 10 individuals say their lifestyle in retirement is as expected or better
Figure 38: The majority of retirees feel confident that their pension/savings will last their entire lifetime
Figure 39: Confidence surrounding pensions/savings has remained broadly unchanged among retirees despite COVID-19
Figure 40: Half of retirees review their budgets once a month

• Aviva
• Prudential
• Lloyds Banking Group
• Phoenix Group
• Zurich Financial Services
• BlackRock
• British Airways
• Fidelity
• LV=
• Quilter
• Rothesay Life
• Royal London Mutual
• Pension Insurance Corporation (PIC)
• Just Group
• Canada Life
• ReAssure
• Legal & General
• Guardian
• HSBC Master Trust
• Aegon Master Trust
• Scottish Widows Master Trust
• The People’s Pension
• National Employment Savings Trust (NEST)
• Uber