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.
Table of Contents
- 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
- Income drawdown is a popular alternative when the annuity market is
unfavourable
- 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
- Life expectancy is the single most pressing issue affecting the UK
annuity market
- 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
- Equity release is becoming increasingly popular
- 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
- Prudential, Scottish Widows and Standard Life are the key providers in
the income drawdown market
- 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
- The equity release market is no longer dominated by the two giants
- 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
- Asociation of British Insurers definitions of products
- Research methodology
- Future readings
- Life and Pensions SPP
- Interactive Databases
- Reports and Briefs
- Financial Advice Market SPP
- Life and Pensions 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
- Definitions
