Title
Contents
Acknowledgements 7
The Authors 8
Abbreviations 9
Glossary of terms 10
Summary 18
1. Introduction 25
1.1 Policy background: the Pensions Act 2008 25
1.1.1 Automatic enrolment 26
1.1.2 Minimum employer contribution 26
1.1.3 The personal accounts scheme 26
1.1.4 Qualifying workplace pension schemes 27
1.2 Research objectives 27
1.3 Market background: workplace pensions 28
1.3.1 The workplace pensions market 28
1.3.2 The workplace pensions industry 30
1.4 Project methodology 31
1.4.1 Participants' perceptions 31
1.4.2 Identifying providers and intermediaries 32
1.4.3 Telephone screening and identifying the appropriate respondent 33
1.4.4 In-depth interviewing 34
1.4.5 Analysis and reporting 34
2. The workplace pension market in 2008 36
2.1 Pension products available: the shift from occupational schemes to workplace personal pensions 36
2.1.1 Mass market pension provision 36
2.1.2 Director and senior manager pension provision 37
2.2 The charging structure of group personal pensions and group stakeholder pensions 38
2.3 The impact of the group stakeholder charging cap upon GPP and SHP charges 39
2.3.1 How providers identify profitable business 41
2.3.2 Intermediaries' sources of revenue in the WPP market 41
3. Awareness of the workplace pension reforms and areas where providers and intermediaries needed clarification 43
3.1 Awareness of the reforms 44
3.1.1 Awareness among providers 44
3.1.2 Awareness among large intermediaries 45
3.1.3 Awareness among small intermediaries 45
3.1.4 Views of employers' awareness of the reforms 46
3.2 Areas where providers and intermediaries needed clarification 47
3.2.1 Whether the reforms will go ahead as proposed 47
3.2.2 Whether the reforms will impact upon the profitability of pension provision for providers and intermediaries 48
3.2.3 What the level of annual management charge will be 49
3.2.4 What the transfer limits will be 50
3.2.5 What the contribution limits will be 50
3.2.6 How automatic enrolment into WPPs will be phased in 50
3.2.7 Whether there will be a period of time after joining a company before an employee becomes eligible for automatic enrolment 51
3.2.8 How 'qualifying earnings' will be defined 52
4. The potential impact of the workplace pension reforms, and reactions to them 53
4.1 The potential impact of the reforms on the pensions market 53
4.1.1 The type of employer expected to adopt the personal accounts scheme 55
Organisations with very small numbers of employees 56
Organisations with low-paid staff 56
Organisations with a transient workforce 56
Organisations with low levels of take-up or contribution, or with no pension provision 57
4.1.2 The type of employer expected to adopt other qualifying workplace pensions 57
4.2 The potential impact on providers and their possible reaction to the reforms 58
4.2.1 The possibility of some providers withdrawing from the WPP market 58
4.2.2 Possible WPP products to be adopted by those providers remaining in the WPP market 59
Product development ideas 60
Target market 61
Pricing 61
4.3 The potential impact on intermediaries and their possible reaction to the reforms 62
4.3.1 The potential impact on small, commission-based intermediaries 62
4.3.2 The potential impact on large, fee-based intermediaries 63
4.3.3 Possible reaction to the reforms by intermediaries remaining in the workplace pension market 63
5. The potential impact of automatic enrolment with a minimum employer contribution 65
5.1 The expected impact on providers 66
5.1.1 Advantages for providers 66
5.1.2 Disadvantages and risks for providers 66
5.2 The expected impact on employers 67
5.3 The expected impact on employees 69
5.3.1 Advantages for employees 69
5.3.2 Disadvantages and risks for employees 69
Appendix A: Introductory letters 71
A.1 Introductory letter for providers 72
A.2 Introductory letter for intermediaries 76
Appendix B: Factsheet sent to all participants with introductory letter 80
Appendix C: Discussion guide for providers 82
Appendix D: Discussion guide for intermediaries 89
Appendix E: Information about the workplace pension reforms given to participants during the interview 95
Table 1.1 Profile of organisations interviewed 33
Figure 1.1 The types of pension commonly available in the workplace pensions market in 2008 29