United Kingdom (UK) Pensions Market Size, Trends, Competitive Landscape and Forecasts to 2027
Summary
The UK pensions market expanded strongly in 2022, recording a 10.6% rise to reach GBP15.4 billion in annual premium equivalent (APE). Work-based pensions achieved a very strong growth rate of 23.6% over the same period. Due to a rise in workplace pension enrolment, workplace pensions-which account for the bulk of pensions at 57.8%-played a key part in this rise. All other pension types contracted in 2022.
This report examines how the pensions market is changing. Consumers are being encouraged to save in workplace and personal pensions at a time when the impacts of the cost-of-living crisis are squeezing the financials of many households. This report explores how consumers’ attitudes and behaviors towards long-term saving, planning for retirement, and accessing private pensions are changing. It 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 is also provided, while the size of the pensions market has been forecast to 2027.
Scope
- Single individuals (i.e., those not in a legally-recognized relationship) must supplement their state pension by over GBP14,000 per annum in order to achieve a moderate standard of living in retirement, given that the full state pension pays roughly GBP9,000.
- According to our 2023 UK Life and Pensions Survey, 61.9% of people contributed at least 6% of their salary towards their pension in 2023. 18.2% increased their pension contribution in 2023 despite the cost-of-living crisis.
- 56% of pension pots were completely withdrawn upon its first time accessed. 17.7% of over 55s decided to take money out of their pension plans. However, 62.8% of these people did not consult a financial expert, which may have led them to make financially reckless decisions.
- 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
- Most individuals retire at around the SPA
- Table Figure 1: The SPA is set to reach 68 between 2044 and 2046, under current legislation
- Table Figure 2: The majority of individuals retire around the SPA
- The state pension is not adequate to lead a moderate lifestyle, leading to the need for supplementation
- Table Figure 3: Under the new state pension scheme, the disparity between state pension pay is much less than pre-2016
- Table Figure 4: Non-retired individuals are less confident that they will receive a full state pension
- Table Figure 5: Both retirees and non-retired place the most importance on the state pension to fund their retirement
- Table Figure 6: 34.9% of individuals stated that they desire a retirement income between GBP2,000 and GBP2,999 a month
- Table Figure 7: Men desire higher retirement incomes than women
- Table Figure 8: A minimum of GBP12,800 per annum is needed for a single individual to cover expenses in retirement
- Table Figure 9: Women need greater pension pots than men due to having longer life expectancies
- The cost-of-living has impacted the way consumers view their retirement incomes
- Table Figure 10: Non-retired individuals are less confident that their retirement income will cover living expenses
- Table Figure 11: 35—39-year-olds are most concerned about their retirement incomes being sufficient
- Most individuals retire at around the SPA
- Private Pensions: Market Size and Players
- Saving into workplace pensions increases, whilst other pension types fall in 2022
- Table Figure 12: APE for work-based pensions solely contributed to the overall growth of the pensions market
- Table Trust-based APE by product type (GBP million), 2018—22
- Table Individual APE by product type (GBP million), 2018—22
- Table Figure 13: 37.3% of self-employed individuals think their employment status will impact their retirement income
- Table Figure 14: The majority of pensions distribution goes through the independent advice channel
- Table New total premiums APE by advice type (GBP million), 2018—22
- Table Figure 15: The pensions market is predicted to continuously grow until 2027f
- Phoenix Group Holdings are now the top providers of trustbased pensions
- Table Top 10 UK individual and workplace pension providers by GWP, 2021
- Table Top 10 UK trust-based pension providers by GWP, 2021
- Other market developments
- Table Figure 16: Younger place far greater emphasis on the importance of sustainable investing in their investment strategy
- Table Figure 17: AS household income increases so does the intention to use the extra pension annual allowance
- Saving into workplace pensions increases, whilst other pension types fall in 2022
- Saving for Retirement
- The number of individuals with workplace pensions is increasing due to AE
- Table Figure 18: The proportion of employees with workplace pensions grows again in 2021
- Table Figure 19: Younger consumers are more likely to have started a workplace pensions as a result of AE
- Table Figure 20: Workplace pensions participation amongst 16–21-year-olds is low as a result of AE eligibility
- Table Total minimum contribution rose to 8% of qualifying earnings in April 2019
- Table Figure 21: 31.7% of individuals would never opt-out, emphasizing the desire to save for retirement
- Pension pot characteristics and saving attitudes
- Table Figure 22: DC schemes continue to grow among non-retired, as employers continue to favor them
- Table Figure 23: The total number of workplace pensions fall around SPA, as many consolidate their pensions
- Table Figure 24: 61.9% of individuals contributing a minimum of 6% of their income towards their pension
- Table Figure 25: The proportion of self-employed contributing nothing to their pension has fallen to 11.9% from 21.1%
- Table Figure 26: Most employers match the contribution of their employees, whereas 15.6% go higher than the employees
- Table Figure 27: Only 22.3% actively take part in the investment of their pension plan
- Table Figure 28: Most individuals tend to know the size of their pension pot closer to retirement
- Table Figure 29: 41.8% of individuals aged 65—69 have a pot of GBP10,000 – GBP30,000 compared to 21.8% of 60—64
- Table Figure 30: There is a large disparity of pension pot size between men and women approaching the SPA
- The number of individuals with workplace pensions is increasing due to AE
- Pension Decumulation
- Many individuals are not seeking financial advice when withdrawing from their pension
- Table Figure 31: Over 55s have flexibility in terms of withdrawing pension income
- Table Figure 32: The proportion of individuals using their pension fund for everyday expenses rose from 33.3% to 37.7%
- Table Figure 33: Most individuals defer claiming a pension to work longer in order to gradually build up a larger fund
- Consumers' approach to accessing pensions for the first time
- Table Figure 34: 56.0% of pension pots were completely withdrawn from upon its first time accessed
- Table Figure 35: 85.2% of small pension pots (less than GBP10,000) are completely withdraw upon first access
- Income drawdowns and annuities
- Table Figure 36: New premiums for income drawdowns increase again in 2022
- Table Figure 37: The value of taxable flexible payments from pensions significantly increased in Q2 2022
- Table Example of average retirement income through annuities, January 2022 to November 2022
- Many individuals are not seeking financial advice when withdrawing from their pension
- Lifestyle in Retirement
- Retirees are confident about their retirement lifestyle and funds
- Table Figure 38: 88.9% of individuals state their lifestyle in retirement is better than or as expected in 2023
- Table Figure 39: Roughly three quarters of retirees are confident their pension/savings are enough to last their entire life
- Table Figure 40: Most retirees review their budget once a month
- Retirees are confident about their retirement lifestyle and funds
- Appendix
- Abbreviations, acronyms, and initialisms
- Definitions
- Methodology
- Secondary sources
- Future reading
- About GlobalData
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