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Home > Business/Finance > Financial Services > Financial Management
Annuities - UK
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The UK annuity market is currently in a healthy state, and prospects look promising. Over the next few years, more people are due to come to the market, as the baby boom generation reaches retirement age. The pool of defined-contribution pension savers is set to get a significant boost in 2012, with the arrival of personal accounts. Both adviser and consumer interest in annuity products is also growing, thanks to new product innovations, such as enhanced and impaired life annuities and so called ‘third way’ products.
Nevertheless, there are still challenges ahead - one of which relates to consumer education. Our research shows that most people, including many money-purchase pension savers, have little or no understanding of annuities - let alone awareness that they even have to buy one. Moreover, most pension savers are not contributing enough to counter the effects of increasing life expectancy and are likely to end up with a much lower pension income than they were envisaging. At the same time, pricing and competitive pressures will continue to squeeze the profit margins of conventional annuity providers, as the pool of ‘healthy lives’ shrinks while the non-conventional sector expands.
Mintel’s report investigates these issues, drawing on a range of sources, including the expert opinions of industry executives and the findings of our independent consumer survey. Additionally, the report seeks to answer the following questions:
- What are the main factors driving change in the annuities market?
- Who are the leading annuity providers and what key challenges do they face?
- What is the size of the pension annuities market in the UK and how it does it compare with competitor products, such as income drawdown?
- What pension products do consumers have and what’s the size of the potential annuity target audience?
- What’s the value of people’s pension funds - and what proportion of pension savers actually know the current value of their fund(s)?
- At what age do people plan to retire?
- What is the level of annuity awareness and understanding among the target audience?
- What expectations do people have with regards to seeking advice and shopping around for annuities, and the type of solution they are likely to be interested in?
- What is the level of interest in alternative products such as income drawdown?
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