28 th May 2015 Why are we here? Source: ONS 2012-Based National - - PowerPoint PPT Presentation

Financial Services and the Privatisation of Risk Trajectory Trends Breakfast 28th May 2015

Why are we here?

Why are we here?

12,280 25,443 5,000 10,000 15,000 20,000 25,000 30,000

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2041 2046 2051 2056 2061 2062 2066 2071 2076 2081 2086 2087 2092 2102 2112

UK Pensioners (thousands)

2015

Source: ONS 2012-Based National Population Projections

Why are we here?

3.21 2.74 0.5 1 1.5 2 2.5 3 3.5 4

UK Ratio of Working Age to Pension Age Adults: Population Projections

Source: ONS 2012-Based National Population Projections

Importance of pensions as a national issue?

Source: Ipsos MORI Issues Index

3% 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15

Ipsos MORI Issues Index

Pensions/Social Security Economy NHS Housing

Issues at family level

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

YouGov: which of the following do you think are the most important issues facing you and your family?

Pensions Health Housing

Source: YouGov Issues Tracker

Perceptions of pension complexity (2013)

47% 52% 47% 52% 45% 42% 51% 0% 10% 20% 30% 40% 50% 60% 15 to 24 25 to 34 35 to 44 45 to 54 55 to 64 65 to 74 75 and over Age Agree strongly Agree Neither agree/disagree Disagree Disagree strongly Source: 2013 British Social Attitudes Survey

Compromised Consumers

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% UK France Italy Germany Spain

% of compromised consumers by age and nation

All adults 18-34 35-54 55+ Source: Trajectory Global Foresight; 2013 &2014

Low sense of choice/control

+

High sense of time pressure

+

Exclusive focus on price

The privatisation of risk

“National compulsory insurance for all classes for all purposes from the cradle to the grave.”

(Winston Churchill)

Pension reforms

• Announced in the 2014 Budget, reforms

which came into effect on April 6th 2015 have drastically changed the way in which pensions operate.

• High profile elements of the reforms include:

– The ability to cash out your pension pot – the first 25% tax free. – Increased flexibility of income drawdown rules. – Allowing those with ‘capped’ drawdown to convert to a new flexible drawdown fund.

Immediate reaction

The New Morality

Self-Preservation Society C-Suite Scrutiny Brands: Citizen to Personal

The Compromised Consumer

Value Hunting Discretionary Thrift Mercurial Consumption Decline of Deference Anxiety Society Hyper-Connectivity

financial crisis, recession, austerity, stagnation, debt, youth, income, employment

Austerity, pensioners and the New Morality

One year on

An enduring crisis of trust?

Source: Edelman Trust Barometer 2015 - UK Results

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Edelman Trust Barometer 2015 – UK Results

2014 2015 Trust Increased Trust Decreased

Bank Fines

Banks clobbered by $6bn forex-rigging fine but share prices rise as penalties less severe than expected Who made the FCA’s 2014 naughty list: Which institutions received the biggest fines last year? Biggest bank fines in history: 2014 could be costliest year ever as value of fines rise by 30 per cent

Pensions mis-selling scandal?

Budget freedoms could lead to scandal ‘worth billions’

Written by Adam Cadle

15/01/2015

One Year On

7th April 2015 1st March 2015

Consumer responses

30%

27% 14% 12% 6% 5% 5%

0% 5% 10% 15% 20% 25% 30% 35% I don't have a plan at the moment I'm not sure Take the 25% tax- free cash immediately and take the rest of the pot as cash as and when I want it Take my whole pension as cash in

• ne go

Take only the 25% tax-free as cash and take a taxable regular income, but not cash from the rest Take only the 25% tax-free as cash and leave the rest invested I won't be able to take any money out when the new rules come into effect

Plans regarding tax free allowance (total %)

Source: Ipsos MORI Defined Contribution Pensions survey, October 2014

Consumer responses

23% 22% 21% 16% 14% 13% 12% 8% 5% 4% 3%

0% 5% 10% 15% 20% 25%

What do you plan to do with the cash you take from your pension? (total responses %)

Source: Ipsos MORI Defined Contribution Pensions survey, October 2014

Responses by gender

0% 5% 10% 15% 20% 25% 30% 35% 40% Take my whole pension as cash in one go (the first 25% tax free and the rest taxed) Take the 25% tax- free cash immediately and take the rest of the pot as cash as and when I want it Take only the 25% tax-free as cash and take a taxable regular income, but not cash from the rest Take only the 25% tax-free as cash and leave the rest invested I don't have a plan at the moment I won't be able to take any money

• ut when the

new rules come into effect I'm not sure

Plans regarding tax free allowance by gender

Male Female

Source: Ipsos MORI Defined Contribution Pensions survey

Responses by gender

0% 5% 10% 15% 20% 25% 30% 35% 40%

What do you plan to do with the cash you take from your pension? (responses by gender)

Male Female

Source: Ipsos MORI Defined Contribution Pensions survey

Responses by social grade

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Take my whole pension as cash in

• ne go (the first

25% tax free and the rest taxed) Take the 25% tax- free cash immediately and take the rest of the pot as cash as and when I want it Take only the 25% tax-free as cash and take a taxable regular income, but not cash from the rest Take only the 25% tax-free as cash and leave the rest invested I don't have a plan at the moment I won't be able to take any money

• ut when the new

rules come into effect I'm not sure

Plans regarding tax free allowance by social grade

AB C1 C2 DE

Source: Ipsos MORI Defined Contribution Pensions survey

Responses by social grade

0% 5% 10% 15% 20% 25% 30% 35% 40%

What do you plan to do with the cash you take from your pension? (responses by social grade)

AB C1 C2 DE

Source: Ipsos MORI Defined Contribution Pensions survey

Statutory provision of guidance

Financial sector focus?

Older generations and tech

0% 20% 40% 60% 80% 100% Other electronic device e-Reader Games Console Standard mobile phone Stereo/home system Tablet Printed copy Landline phone Smartphone Radio set Computer TV set Adults aged 16+ 16-24 65+ Source: Ofcom Media Literacy Tracker

Financial Vision

With faltering steps, an elderly customer navigates her way to the end of a queue in the bright, airy and revamped branch of Barclays Bank. She looks at the self-service kiosks, notes the absence of traditional glass counters, spots staff dealing with enquiries via tablet computers and turns to her friend. "It's bedlam in here," she says.

http://www.bbc.co.uk/news/business-28851597 http://www.ft.com/cms/s/0/a5cfd1ba-9ffa-11e4-9a74-00144feab7de.html#slide0

“Any Time, Any Place, Any Where” Anna Botin, Santander

Good Practice

Clear signposting Multiple communications channels Easy transference options Telephone access to advisors Plain English Text to speak services

SUMMARY AND QUESTIONS

A programme for success

• Consumer rights and education provision
• A robust digital inclusion and education programme
• Universal consumer touchpoint provision
• Seamless, secure, cross-service personalisation
• Visible public regulation, resourcing and guidance
• Deeper insight into audience needs - product innovation
• Effective, accessible, rapid consumer right of redress
• Radial transparency in pricing, performance, risks, returns

The Trust Equation

Source: David Maister - The Trusted Advisor – The Economics of Trust

Thanks for your time

Trajectory Ltd Enterprise House 1-2 Hatfields London SE1 9PG T 020 3567 5801 @TrajectoryTweet

www.trajectorypartnership.com

The post-recessionary consumer (UK)?

10 20 30 40 50 60 70 80

Fighting rising prices most important to me When jobs are scarce nationals should take priority

• ver immigrants

The world today is a more dangerous place than it used to be I often feel under time-pressure in my day-to-day life Low sense of choice and control Getting the cheapest price when shopping is VERY important to me Ethnic diversity erodes national unity Expect financial position of household to get worse

All adults 18-24 25-34 35-44 45-54 55+