UK At-retirement Market 2007 : Market Research Report

UK At-retirement Market 2007

Published by: Datamonitor

Published: Mar. 27, 2007 - 70 Pages

CHAPTER 1 EXECUTIVE SUMMARY: Market Focus; Sector Issues; Competitor Issues; Distribution Dynamics
CHAPTER 2 INTRODUCTION: What is this report about?; Who is the target reader?; How to use this report
CHAPTER 3 MARKET FOCUS: Introduction; Key findings; Historic Data; Key Products; Pension annuities are the leading retirement product; Fixed-rate annuities are less flexible; Index-linked annuities can be pricey; Investment-linked annuities are only a small part of the total market; Open annuities offer a lump sum at death; The purchased life annuities market is under-developed; Value-Protected annuities provide protection of capital; Enhanced annuities are a growing market; Alternative products; Income drawdown is a popular alternative when the annuity market is unfavourable; Strengths of income drawdown; Weaknesses of income drawdown; Alternatively Secured Pensions are a controversial topic; Trivial Commutation is unlikely to affect large numbers of people; Hybrid annuities offer more flexibility and are likely to develop fast; The equity release market has recently seen strong growth; Strengths of equity release; Weaknesses of equity release; Trends and Drivers; Life expectancy is the single most pressing issue affecting the UK annuity market; Changes in attitude and greater awareness has contributed to an increase in longevity; Increased longevity makes annuities more expensive; Interest rates have an impact on annuity rates; A-Day has had a negative effect on annuity rates; Customer attitudes are changing slowly, but education is paramount; Regulation; ASP is the most controversial issue in the at-retirement market in 2007; UCITS III has had a positive impact on the market; The European Age Discrimination directive will impact product development; A-Day has led to increased sales of alternative products such as income drawdown; The majority of providers believe more legislation is necessary
CHAPTER 4 SECTOR ISSUES: Introduction; Key findings; Key Issues; Consumer confidence has been affected by government indecision; The U-turn on ASP is likely to have a positive effect on the annuity market; The ASP is not the Holy Grail; Trivial commutation is unlikely to have a big impact; There is an over-reliance on property in retirement portfolios; Equity release is becoming increasingly popular; 1) Lifetime Mortgages; 2) Reversion Schemes; Equity release is primarily sold through intermediaries; Strategic Issues; Life expectancy is changing annuity pricing structures; Consumers are moving towards more diversified alternatives; Resolution of Issues; Flexibility is important to maintain a steady income; Providers must place more of a priority on the annuity business
CHAPTER 5 COMPETITOR ISSUES: Introduction; Market share; Recent Product Developments; The UK market remains dominated by a number of leading annuity providers; Scottish Widows is one of the UK's most recognized brands; Legal & General is one of the foremost UK insurance companies; Prudential is a leader in the UK retirement market; Standard Life is one of the largest UK provider of pensions in the UK; Norwich Union sales were boosted by A-Day; Friends Provident targets wealthy customers; Retirement investment plan; New entries into the UK at-retirement market; Metlife is one of the USA's largest insurers; Just Retirement focuses only on retirement products; Living Time attempts to offer more flexible products; Aegon Scottish Equitable saw high levels of growth in 2006; Hartford is the largest global provider of investment bonds; Innovation is growing in the at-retirement market; Metlife have introduced a 'unique' new product; New entrants are driving growth in the non-convential arena; Income Drawdown is still dominated by three major players; Prudential, Scottish Widows and Standard Life are the key providers in the income drawdown market; Prudential; Scottish Widows; Standard Life; The equity release market is growing; The equity release market is no longer dominated by the two giants; New entrants are vying for a position in the market; Product innovation is growing; Distribution is key
CHAPTER 6 DISTRIBUTION DYNAMICS: Introduction; Key findings; Independent intermediaries account for around 70% of pension annuities business; Independents also dominate the income drawdown market; Increase in competition due to high margins for annuity business; FSA review of distribution may be a catalyst for change; But IFAs will play a crucial role in the new retirement era
CHAPTER 7 APPENDIX: Definitions; Asociation of British Insurers definitions of products; Pension annuities; Income drawdown; Association of British Insurers definitions of distribution channels; Independent Financial Advisers (IFAs); Direct sales forces; Tied agents; Multi-tied agents; Bancassurance; Direct marketing; Telesales; Other; Other definitions; Additional Voluntary Contributions (AVCs); Annuity; Defined contribution pension scheme; Defined benefits pension scheme; Research methodology; Future readings; Life and Pensions SPP; Interactive Databases; Reports and Briefs; Financial Advice Market SPP; SPP writing team; How to contact experts in your industry
List of Tables: Table 1: Pension Annuities in Force, 1995-2006; Table 2: Total new premiums, 2002-2006; Table 3: The UK Income Drawdown Market 2004-2006; Table 4: The UK Annuity Market, 1994-2005; Table 3: Annuities with-profits, total business 2005; Table 4: Non-profit annuities, total business 2006; Table 5: Non-profit impaired life annuities, total business 2006; Table 8: Pension annuities sales 2002-06, split by distribution channel; Table 9: Income drawdown sales 2002-06, split by distribution channel
List of Figures: Figure 1: UK At-Retirement 2007: Available Briefs; Figure 2: Annuities can be used to provide a level or increasing income; Figure 3: Life expectancy in the UK has reached record levels; Figure 4: Women are living almost 20 years longer at age 65; Figure 5: Income drawdown sales increased significantly in Q2 2006 as the price fell

Abstract

Introduction

This report looks at what products have been launched in this area of the market, how successful they have been and what challenges are facing providers and distributors in the at-retirement market.Scope

Sizes and forecasts the market for fixed annuity, variable annuity and income drawdown products as well as new and alternative offerings Evaluates in detail the current regulatory climate, including post A-Day effects on the market Provides comprehensive competitor informationHighlights

Retirement income products provide an income for those in the latter part of their lives. It is a fast growing market. The demographic bump of the baby boomer generation entering retirement is set to boost the market's size and wealth, with increasing longevity having a major impact on the market. The market is dominated by annuities, particularly fixed-rate products which offer people the security of a guaranteed income in retirement. However, hybrid products are rapidly growing in popularity, as are income drawdown products, boosted by people's increasing need for a flexible income in retirement. Prudential is the dominant player in the annuity market Norwich Union and Standard Life also strong players. New and innovative entrants have also arrived in recent years, particularly from the US, including Metlife and Hartford.Reasons to Purchase

Sizes the sales of retirement income products in the UK, allowing competitors to understand the potential of the market. Uses information from extensive in-depth interviews with leading industry figures to analyze the market trends and how they will impact the future. Highlights

consumer attitudes and behaviors in the retirement income market in order to help competitors understand their market better.

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UK At-retirement Market 2007

Table of Contents

Abstract