'At-retirement' market set for rapid growth in the next five yearsUK - July 14, 2009 - Watson Wyatt predicts the UK ‘at-retirement’ market for financial products will grow by over 60 per cent during the next five years to £23.1 billion, from £14.1 billion at the end of 2008.
Andy Sanders, senior consultant at Watson Wyatt, said: “Despite poor investment markets, which have negatively affected accumulated pensions savings, the ‘at-retirement’ market is still expected to grow in 2009, and then substantially more in the following years. This growth will be driven by the increasing number of people coming up to retirement in the next five to ten years and offers considerable opportunities for product providers and financial advisers alike.”
Another aspect of the research relates to the non-pension assets of those reaching retirement, which the firm also anticipates will grow considerably. The non-pensions assets included in the study (in order of size) are residential property equity, cash deposits, life investment bonds, cash ISAs and stocks & shares ISAs. The research found that the sum of these assets currently far exceed the accumulated pensions savings which underpin the ‘at-retirement’ market. Currently, these non-pensions assets are approaching four times the size of the accumulated pensions savings and this gap is predicted to remain over the medium to longer term.
Andy Sanders said: “This new aspect of our research shows the extent of the non-pensions assets of those reaching retirement. Pensions savings are substantial and generate a large and growing ‘at-retirement’ market. However, it is apparent that many approaching retirement have significant other wealth which also needs to be managed. People are faced with the prospect of longer retirements and are increasingly looking for ways to maximise retirement income and avoid capital erosion across all of the assets at their disposal.”
Watson Wyatt’s research is based on a study sponsored by leading financial services companies active in the retirement planning and ‘at-retirement’ markets. The firm’s calculations are based in part on data from the Financial Services Authority for current market sizing, the Association of British Insurers for new business trends as well as Watson Wyatt’s regular ‘at-retirement’ market surveys. It combined this with data on age, sex and accumulated fund distribution from the sponsors and other sources, together with its own information on occupational defined contribution pensions.
Notes to editors
‘At retirement’ financial products are those designed to convert invested pensions assets, such as those built up within personal pension plans, into income. They include conventional annuities, income drawdown and 'third-way' products (such as variable annuities).
For more information please contact:
Paul Deane-Williams
Head of Public Relations - Investment and Insurance & Financial Services
Watson Wyatt Limited
+44 (0)1737 274397
paul.deane-williams@watsonwyatt.com
Visit Watson Wyatt's online press office: www.watsonwyatt.com/europe/news/journalists.
Watson Wyatt Worldwide
Watson Wyatt (NYSE, NASDAQ: WW) is the trusted business partner to the world's leading organizations on people and financial issues. The firms global services include: managing the cost and effectiveness of employee benefit programs; developing attraction, retention and reward strategies; advising pension plan sponsors and other institutions on optimal investment strategies; providing strategic and financial advice to insurance and financial services companies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,700 associates in 33 countries and is located on the web at www.watsonwyatt.com   | 
