United Kingdom (UK) Pensions Market Size, Trends, Competitive Landscape and Forecasts, 2022-2026
Summary
This report explores how consumers’ attitudes and behaviors towards long-term saving, planning for retirement, and accessing private pensions are changing as a result of the COVID-19 pandemic and economic uncertainty. The report provides current and historical data on the size of the market by product type, covering individual pensions, workplace pensions, and trust-based pensions. Data on common retirement products (annuities and income drawdowns) is also provided, while the size of the pensions market has been forecast to 2026.
In 2021, the UK pensions market rebounded, increasing by 8.4% to GBP13.9 billion in annual premium equivalent (APE). The majority of pension types saw growth, led by master trusts with an increase of 37.4%. Workplace pensions (which make up the majority of all pensions) experienced the second-largest growth (+13.5%) due to a declining unemployment rate and increasing workplace pension enrollment. In addition, as the COVID-19 furlough scheme came to an end, pension contributions were calculated using employees’ regular wage, rather than their reduced wage.
Scope
- For a reasonable standard of living in retirement, single individuals need to supplement the state pension by around GBP12,000 a year. The gender gap in pensions is highlighted by the fact that women need larger pension pots than men do for the same retirement income due to longer life expectancies.
- 56.8% of the people who participated in GlobalData’s 2022 Life and Pensions Survey paid at least 6% of their salary in pension contributions during the previous month - more than the minimum required by employees (5%).
- 57.3% of all pension pots are entirely withdrawn at first access. 9.6% of over 55s mentioned they had withdrawn money from their private pensions, of which just 39.4% received financial advice before doing so.
- Examine the size of the pensions market
- Discover how individuals save towards retirement
- Learn how individuals access their private pensions for the first time
- Understand trends in the income drawdown and annuities segments
- Explore the gender gap in pensions
- Understand the impact of the cost-of-living crisis on the market, sentiment, and customer behavior
- Executive Summary
- Market overview
- Key findings
- Critical success factors
- The State Pension and Retirement Planning
- Upon reaching the SPA, the majority of individuals retire
- Table Figure 1: The SPA will rise to 68 by 2039
- Table Figure 2: Most individuals retire at around the SPA
- The state pension is not enough to support a comfortable lifestyle
- Table Figure 3: The state pension pay of women is lower than for men
- Table Figure 4: An increase to qualifying years makes non-retirees less confident they will receive the full state pension
- Table Figure 5: Adults who are not yet retired value the state pension less than those who are retired
- Table Figure 6: Most individuals desire a retirement income of between GBP1,000 and GBP1,999 per month
- Table Figure 7: Men want a higher monthly income in retirement than women
- Table Figure 8: Single individuals need at least GBP10,900 per annum in retirement to cover expenses
- Table Figure 9: Due to their longer life expectancies, women require larger pension pots than men do in order to have the same income in retirement
- The rising cost of living is impacting retirement income for both non-retirees and retirees
- Table Figure 10: Non-retired individuals are more concerned about their retirement income covering their cost of living
- Table Figure 11: 30–39-year-olds are most likely to say their retirement income cannot cover their living expenses
- Upon reaching the SPA, the majority of individuals retire
- Private Pensions: Market Size and Players
- Savings into pensions bounced back following a fall in 2020
- Table Figure 12: APE for all pension types except trust-based pensions grew in 2021
- Table Trust-based APE by product type (GBP million), 2017–21
- Table Individual APE by product type (GBP million), 2017–21
- Table Figure 13: Almost a third of self-employed individuals think their employment status will adversely impact their retirement income
- Table Figure 14: The independent advice channel dominates in terms of pension distribution
- Table New total premiums APE by advice type (GBP million), 2017–21
- Table Figure 15: The pensions market is forecast to grow to 2026f
- BlackRock and Rothesay Life lead the pensions market
- Table Top 10 UK individual and workplace pension providers by GWP, 2020
- Table Top 10 UK trust-based pension providers by GWP, 2020
- Other market developments
- Savings into pensions bounced back following a fall in 2020
- Saving for Retirement
- Due to AE, more individuals are contributing to their workplace pensions
- Table Figure 16: Growth in workplace pension participation grew once more in 2021
- Table AE thresholds, 2020–21 to 2022–23
- Table Figure 17: The majority of younger adults have started a workplace pension due to AE
- Table Figure 18: Involvement in workplace pensions is incredibly low among individuals aged 16 to 21
- Table Total minimum contributions rose to 8% of qualifying earnings in April 2019
- Table Figure 19: A third of individuals would never opt out of their workplace pension, regardless of the contribution rate
- Pension pot characteristics and saving attitudes
- Table Figure 20: There has been a shift away from DB towards DC schemes
- Table Figure 21: Many adults consolidate their pension pots once they reach the SPA
- Table Figure 22: 56.8% of individuals contribute at least 6% of their income to pensions
- Table Figure 23: 98.7% of full-time employees make contributions towards a pension
- Table Figure 24: The largest proportion of employers match the contribution of their employees
- Table Figure 25: Few individuals actively choose the investments in their pension plan
- Table Figure 26: Over the course of their working lives, many lose sight of how much their pension is worth
- Table Figure 27: A sizable proportion of individuals 55 and above have pension funds worth over GBP100,000
- Table Figure 28: The pension pots of women approaching the SPA are smaller than those of men
- Due to AE, more individuals are contributing to their workplace pensions
- Pension Decumulation
- Many people over 55 making pension withdrawals are endangering their long-term savings
- Table Figure 29: Over 55s have flexibility in terms of drawing pension income
- Table Figure 30: The largest proportion of over 55s withdrawing from pensions use the funds for everyday expenses
- Table Figure 31: Most people delay claiming a pension in order to continue working longer
- Accessing pensions for the first time
- Table Figure 32: When a pension plan is accessed for the first time, more than half are completely withdrawn
- Table Figure 33: Small pension pots are typically completely withdrawn when initially accessed
- Income drawdowns and annuities
- Table Figure 34: Income drawdowns and annuity sales have recovered following the pandemic
- Table Figure 35: The value of taxable flexible payments from pensions increased in 2021
- Table Example of average retirement income through annuities, May 2019 to May 2021
- Many people over 55 making pension withdrawals are endangering their long-term savings
- Lifestyle in Retirement
- Retirees have confidence in their retirement funds
- Table Figure 36: More than 90% of people claim that their lifestyle after retirement is better than or as expected
- Table Figure 37: Most retirees are convinced their pensions and savings will sustain them for the rest of their lives
- Table Figure 38: Just under half of retirees review their budgets once a month
- Retirees have confidence in their retirement funds
- Appendix
- Abbreviations and acronyms
- Definitions
- Methodology
- Secondary sources
- Further reading
- About GlobalData
- Contact Us
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