United Kingdom (UK) Pensions Market Size, Trends, Competitive Landscape and Forecasts to 2027

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UK Pensions Market Overview

The UK pensions market size was GBP15.4 billion in terms of annual premium equivalent (APE) in 2022. The market is expected to achieve a CAGR of more than 2% during 2022-2027. Due to a rise in workplace pension enrolment, it achieved a very strong growth rate in 2022 while all other pension types contracted. Most pension withdrawals are used to cover everyday expenses and a sizable portion is used to pay off mortgages. Annuities saw a dip in 2022, but income drawdowns increased.

UK Pensions Market Outlook, 2022-2027 (GBP Billion)

UK Pensions Market Outlook, 2022-2027 (GBP Billion)

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The United Kingdom (UK) Pensions market research report examines the changes in the pensions market. The report explores how consumers’ attitudes and behaviors towards long-term saving, planning for retirement, and accessing private pensions are changing. The report also provides current and historical data on the size of the market by product type covering individual pensions, workplace pensions, and trust-based pensions. Moreover, data on common retirement products and pension providers is also provided.

Market Size (2022) GBP15.4 Billion
CAGR (2022-2027) >2%
Historical Period 2018-2022
Forecast Period 2023-2027
Pension Types ·        Work-Based Pensions

·        Trust-Based Pensions

·        Individual Pensions

·        Master Trusts

Leading Providers ·        BlackRock

·        Royal London Mutual

·        Aviva plc

·        Lloyds Banking Group

·        Phoenix Group Holdings

·        M&G Plc

·        FIL Ltd

·        Liverpool Victoria Financial Services

·        Vitality Life Limited

·        Wesleyan Assurance

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UK Pensions Market Dynamics

Life expectancy has fallen in the UK because of the pandemic, changing the state pension landscape. This means the UK Government has delayed the plan for the state pension age (SPA) to increase to 68 by 2039. The high inflationary trend that has been present throughout 2022 and 2023 has influenced retirement trends, especially for people between the ages of 55 and 59. Notably, many individuals are concerned about their pension’s capacity to pay rising bills. Consequently, in reaction to the ongoing cost-of-living crisis, a trend towards later retirement is starting to emerge. This is further supported by an increase in the number of individuals who plan to retire after the state retirement age.

UK Pensions Market Segmentation by Types

In 2022, work-based pensions held the highest share of the pensions market.

The key pension types in the UK pensions market include work-based pensions, trust-based pensions, individual pensions, and master trusts. The main driver behind the comeback of the pensions market in 2022 after collapsing in 2020 due to the pandemic was the large expansion of work-based pensions. This increase is due to favorable legislative environments that support employer-based pension plans and growing acknowledgment of the significance of retirement planning. Workplace pensions have become more appealing and available due to employer contributions, employee payments, and potential government incentives under automatic enrolment (AE), which has increased participation. The minimum contribution amount required by the policy has helped increase pension savings.

UK Pensions Market Analysis by Types, 2022 (%)

UK Pensions Market Analysis by Types, 2022 (%)

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UK Pensions Market - Competitive Landscape

BlackRock was the largest provider of individual and workplace pensions in 2021.

Some of the leading providers in the UK pensions market are:

  • BlackRock
  • Royal London Mutual
  • Aviva plc
  • Lloyds Banking Group
  • Phoenix Group Holdings
  • M&G Plc
  • FIL Ltd
  • Liverpool Victoria Financial Services
  • Vitality Life Limited
  • Wesleyan Assurance

UK Pensions Market Analysis by Providers, 2021 (%)

UK Pensions Market Analysis by Providers, 2021 (%)

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Segments Covered in the Report

UK Pensions Market Types Outlook (Value, GBP Billion, 2018-2027)

  • Work-Based Pensions
  • Trust-Based Pensions
  • Individual Pensions
  • Master Trusts

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.

Reasons to Buy

  • Examine the size of the pensions market
  • Discover how individuals save toward 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

BlackRock
Royal London Mutual
Aviva
Lloyds Banking Group
Phoenix Group
M&G
Fidelity International
Liverpool Victoria Financial Services
Vitality
Wesleyan
British Airways
Royal Mail
NatWest Group
Cushon
Smart Pension
Evolve Pensions
Rothesay Life
Standard Life
Chubb
Agfa UK
Sun Life UK
Threadneedle
Cobham Pension Plan
NTL
Pension Insurance Corporation (PIC)
Just Group
Canada Life
Bfinance
Uber

Table of Contents

  • 1 Executive Summary

    • 1.1 Market overview
    • 1.2 Key findings
    • 1.3 Critical success factors

  • 2 The State Pension and Retirement Planning

    • 2.1 Most individuals retire at around the SPA
    • 2.2 The state pension is not adequate to lead a moderate lifestyle, leading to the need for supplementation
    • 2.3 The cost-of-living has impacted the way consumers view their retirement incomes

  • 3 Private Pensions: Market Size and Players

    • 3.1 Saving into workplace pensions increases, whilst other pension types fall in 2022
    • 3.2 Phoenix Group Holdings are now the top providers of trust-based pensions
    • 3.3 Other market developments

  • 4 Saving for Retirement

    • 4.1 The number of individuals with workplace pensions is increasing due to AE
    • 4.2 Pension pot characteristics and saving attitudes

  • 5 Pension Decumulation

    • 5.1 Many individuals are not seeking financial advice when withdrawing from their pension
    • 5.2 Consumers’ approach to accessing pensions for the first time
    • 5.3 Income drawdowns and annuities

  • 6 Lifestyle in Retirement

    • 6.1 Retirees are confident about their retirement lifestyle and funds

  • 7 Appendix

    • 7.1 Abbreviations, acronyms, and initialisms
    • 7.2 Definitions
    • 7.3 Methodology
    • 7.4 Secondary sources
    • 7.5 Future reading

  • 8 About GlobalData
  • 9 Contact Us

Table

Table 1: Trust-based APE by product type (GBP million), 2018—22

Table 2: Individual APE by product type (GBP million), 2018—22

Table 3: New total premiums APE by advice type (GBP million), 2018—22

Table 4: Top 10 UK individual and workplace pension providers by GWP, 2021

Table 5: Top 10 UK trust-based pension providers by GWP, 2021

Table 6: Total minimum contribution rose to 8% of qualifying earnings in April 2019

Table 7: Example of average retirement income through annuities, January 2022 to November 2022

Figures

Figure 1: The SPA is set to reach 68 between 2044 and 2046, under current legislation

Figure 2: The majority of individuals retire around the SPA

Figure 3: Under the new state pension scheme, the disparity between state pension pay is much less than pre-2016

Figure 4: Non-retired individuals are less confident that they will receive a full state pension

Figure 5: Both retirees and non-retired place the most importance on the state pension to fund their retirement

Figure 6: 34.9% of individuals stated that they desire a retirement income between GBP2,000 and GBP2,999 a month

Figure 7: Men desire higher retirement incomes than women

Figure 8: A minimum of GBP12,800 per annum is needed for a single individual to cover expenses in retirement

Figure 9: Women need greater pension pots than men due to having longer life expectancies

Figure 10: Non-retired individuals are less confident that their retirement income will cover living expenses

Figure 11: 35—39-year-olds are most concerned about their retirement incomes being sufficient

Figure 12: APE for work-based pensions solely contributed to the overall growth of the pensions market

Figure 13: 37.3% of self-employed individuals think their employment status will impact their retirement income

Figure 14: The majority of pensions distribution goes through the independent advice channel

Figure 15: The pensions market is predicted to continuously grow until 2027f

Figure 16: Younger place far greater emphasis on the importance of sustainable investing in their investment strategy

Figure 17: AS household income increases so does the intention to use the extra pension annual allowance

Figure 18: The proportion of employees with workplace pensions grows again in 2021

Figure 19: Younger consumers are more likely to have started a workplace pensions as a result of AE

Figure 20: Workplace pensions participation amongst 16-21-year-olds is low as a result of AE eligibility

Figure 21: 31.7% of individuals would never opt-out, emphasizing the desire to save for retirement

Figure 22: DC schemes continue to grow among non-retired, as employers continue to favor them

Figure 23: The total number of workplace pensions fall around SPA, as many consolidate their pensions

Figure 24: 61.9% of individuals contributing a minimum of 6% of their income towards their pension

Figure 25: The proportion of self-employed contributing nothing to their pension has fallen to 11.9% from 21.1%

Figure 26: Most employers match the contribution of their employees, whereas 15.6% go higher than the employees

Figure 27: Only 22.3% actively take part in the investment of their pension plan

Figure 28: Most individuals tend to know the size of their pension pot closer to retirement

Figure 29: 41.8% of individuals aged 65—69 have a pot of GBP10,000 – GBP30,000 compared to 21.8% of 60—64

Figure 30: There is a large disparity of pension pot size between men and women approaching the SPA

Figure 31: Over 55s have flexibility in terms of withdrawing pension income

Figure 32: The proportion of individuals using their pension fund for everyday expenses rose from 33.3% to 37.7%

Figure 33: Most individuals defer claiming a pension to work longer in order to gradually build up a larger fund

Figure 34: 56.0% of pension pots were completely withdrawn from upon its first time accessed

Figure 35: 85.2% of small pension pots (less than GBP10,000) are completely withdraw upon first access

Figure 36: New premiums for income drawdowns increase again in 2022

Figure 37: The value of taxable flexible payments from pensions significantly increased in Q2 2022

Figure 38: 88.9% of individuals state their lifestyle in retirement is better than or as expected in 2023

Figure 39: Roughly three quarters of retirees are confident their pension/savings are enough to last their entire life

Figure 40: Most retirees review their budget once a month

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