UK Pension Market Report Published
07 Aug 2018
UK Pension Market, a £190 billion market
The UK pension market is large and diverse, with over 22 million employees in the UK having a workplace pension with most of these (around 16 million) enrolled in an occupational scheme. In 2017, over 2 million new pension products were sold to members of the public and UK pension funds received total contributions of almost £190 billion, representing a 20% rise over the level of 2016.
In addition to the market size and trends, this report looks at the structure of the market for pensions, discusses the drivers of demand, the factors changing how the market operates and key developments with the market. It also looks at the main pension providers and provides forecasts to 2022.
A market radically changed by auto-enrolment
Between 2012 and 2018, an extra 10.3 million employees held a workplace pension, with most signing up to workplace pensions because of auto-enrolment (AE). The vast bulk of AE pension schemes established have been Defined contribution (DC) schemes, primarily DC master trust schemes. These changes have coincided with increased longevity and generally low investment returns in recent years which have forced many deferred benefits (DB) pensions schemes into financial deficit, with employers increasingly closing their schemes to new members.
But not everything in the market is rosy
Despite this market size and level of growth, the market faces several concerns. Specifically, the low level of knowledge and engagement of consumers with their pensions, which is encouraging possibly unwise cash withdrawals from DC pensions and unwise transfers from DB pensions. There are also concerns about the low levels of contributions being made into pensions, especially auto-enrolled workplace schemes. The regulators are also looking more closely at the sector to improve the operational efficiencies of pension schemes and improve the safety of these schemes for their members.