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MAPS : Pensions: 2004

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companies and brand names covered include: Aegon Uk, Aviva, Axa Group, Friends Provident, Legal & General, Life Assurance Holding Corporation, Lincoln National (Uk), Lloyds Tsb, Standard Life, Zurich Financial Services, Equitable Life, Prudential, Marks & Spencer Financial Services, Virgin Money Group, Royal & Sun Alliance Insurance Group

BRIEF DESCRIPTION

Following an executive summary & introduction to the pensions market, this report provides a strategic overview of the sector, with data on market dynamics, pension scheme membership, distribution & competitive structure. It considers marketing trends & provides sector-by-sector analysis of State pensions, State earnings-related pensions (SERPS), personal pensions, annuities & occupational pensions. It provides an international perspective on the market, analyses political, economic, social & technological factors affecting it, & presents the results of original research into consumer attitudes to pensions. It profiles leading providers & considers future prospects for the sector, forecasting new personal pensions business to 2006.

EXECUTIVE SUMMARY

Executive Summary:

INTRODUCTION

The Government's policy to shift responsibility for pensions away from the State and towards the private sector has backfired. Bonus cuts and exit penalties leave millions of investors in personal pensions feeling betrayed. Key Note seeks, therefore, to discover current attitudes to pensions, and to analyse government pension policy in the light of companies' and consumers' views about these problem products.

STRATEGIC OVERVIEW

In 2000, state pensions took only 5% of gross domestic product (GDP), and under the present arrangements they will peak at 6.1% in 2040, but the Government is nervous of spending more. Talk of raising the minimum state pension age is widespread. The Government's plan for low-earning individuals to buy stakeholder pensions has not been the success that was anticipated. More than a million have been sold, but generally not to low-income workers. Companies are now none too sure about the profit potential of pensions. Advertising and direct mail are muted. A mass market in pensions may not be profitable in the long term. The negative publicity for pensions mis-selling, when people were tempted out of defined-benefit occupational schemes into personal pensions, refuses to disappear. Around 350 firms have paid fines for mis-selling pensions to over a million customers.

In 2000/2001, the average household contributed £7.60 a week to occupational pensions and £4.80 a week to personal pensions. These are very modest sums — equivalent to £395 and £250 a year, respectively — and are not nearly enough to fund a decent pension.

MARKETING TRENDS

Pensions advertising declined steeply during the year ending June 2002. Advertising for stakeholder pensions collapsed, as did that for online pensions. In the 3 months April to June 2002, pensions advertising was only 0.6% of all the financial advertising counted by Nielsen Media Research (NMR). The top pensions advertisers over the year ending June 2002, Norwich Union and Prudential, spent virtually nothing in the April to June quarter. In direct marketing, investment products such as pensions are less important than they previously were. During the first quarter of 2002, insurance companies cut their mailings by over a fifth, reflecting their uncertainty about promoting investment products to consumers who have become more aware of risks.

THE STATE PENSION

Governments manipulate pensions. The impact of this manipulation only becomes clear when they have long departed the seats of power. In 1986, for example, the then-Conservative Government made damaging changes to the State Earnings-Related Pension Scheme (SERPS) — most people forgot about this until 1999, the year before the changes were due to come into effect. SERPS was replaced in April 2002 by the State Second Pension (SSP), which is intended particularly for people unable to work and for workers earning less than £10,800 a year. However, the SSP, in combination with other pension schemes and benefits, is extremely complex. October 2003 adds yet another benefit, the Pension Credit, intended to reward pensioners for saving. The Credit is another step away from universal benefits and towards means testing. Soon, around half of all pensioner households will be entitled to claim means-tested benefits.

PERSONAL PENSIONS

The Government of the time played a big part in encouraging people to take out personal pensions by offering £1,200 in contributions to everyone who opted out of SERPS before 1993. Around 5 million employees opted for a personal pension instead of remaining in SERPS, and there were another 5 million personal-pension contributors who were not eligible for SERPS, including the self-employed. Pensions law is stricter for small contributors than for large ones. Contributors with funds above £100,000 can, with a self-invested personal pension (SIPP), make their own decisions on where their money is invested, within defined, but wide, limits. High-earners benefit most from the tax relief on contributions, and from lower percentage charges for fund management. The least affluent benefit from the Government's introduction of the minimum income guarantee, SSP and Pension Credit, but at the cost of leaving out people who are neither low-paid nor high earners: the squeezed of middle Britain.

ANNUITIES

An individual's pension fund, apart from the 25% that can be taken as a lump sum, must be converted into an annuity by the time that individual reaches the age of 75. Annuity rates are based on gilt yields, which fell dramatically through the 1990s and into the 2000s, and on life expectancy, which is rising. This combination of factors puts severe constraints on the rates paid. Annuity values fell by around 15% between 2000 and 2002. The most competitive annuity providers include Allied Dunbar, AMP NPI, Canada Life, GE Life and Scottish Equitable (overseas), and Friends Provident, Legal & General, Norwich Union, Prudential and Scottish Widows (in the UK). In autumn 2002, Prudential was offering the most attractive inflation-linked annuities.

OCCUPATIONAL PENSIONS

Many employers can no longer afford defined-benefit schemes, so are changing to defined-contribution schemes, which are similar to personal pensions in that capital accumulates in a fund that is exchanged for an annuity on retirement. The disappearance of defined-benefit schemes is making contributors nervous about the security of occupational pensions. Ideas to improve security include an insurance scheme guaranteeing a certain percentage of accrued benefits in funds that fail; a state-funded central discontinuance fund that would serve the same purpose; and a change in ownership rights so that an individual's contributions into a scheme would legally belong to him or her.

AN INTERNATIONAL PERSPECTIVE

The move to funded pensions is more advanced in the UK than across Europe, with the exception of the Netherlands. Germany has reformed pensions law to encourage personal provision, but France, Italy and Spain have not. The Italian Government would like to but there is massive opposition from workers. Belgium intends to introduce private second-tier pensions for private-sector workers, in a bid to reduce demands on the state pension. Pension ages for women are being increased in Belgium, Italy, Switzerland and the UK. Across the Atlantic, in 2002, the Mexican Government legislated for US-style retirement plans to be offered to government employees and the self-employed, as well as to the private-sector workers who can already buy them. In Australia, employees must contribute to employer-run superannuation schemes and can withdraw from their funds, in any way they wish, from the age of 55. People who spend their superannuation funds can apply for the state pension from age 65: this is called 'double dipping'. In Singapore, employees pay around a third of their earnings into a provident fund, which builds into a retirement fund. Contributors can withdraw from their fund to pay for a home, for hospital care or for higher education: the potential to cope with important life events is thus allowed for. This compulsory model has many long-term attractions, although it cuts earners' immediate disposable incomes.

PEST ANALYSIS

The Government's Green Paper on pensions, published on 17th December 2002, was a tentative document based on the assumptions that means-tested benefits will continue to help the poorest pensioners, and that everyone else will have to save more and work for longer. The principal structural flaw of this approach is the lack of incentive for people to save when there appears to be a guarantee of adequate (if not generous) retirement income for those who have not saved, or who have saved little. The very large number of fine-tuning measures contained in the Green Paper does not address this fundamental problem.

Pension funds have been growing at a far slower rate than individuals' borrowing, which reached £810bn outstanding at the end of October 2002, £9.3bn more than at the end of September 2002. The UK population is not as income-rich as earnings statistics often imply, and this restricts individuals' scope for saving and investing. The combination of restricted incomes and heavy borrowings is bad news for the long-term savings sector, including pensions.

CONSUMER DYNAMICS

Between 2000 and 2002, according to Key Note's exclusive NOP research, the public became more pessimistic about pensions. The proportion prepared to accept a minimum state pension age at the age of 70 doubled, although was only a small minority. The percentage not knowing how much to contribute to a pension plan to ensure a comfortable retirement almost doubled, and the proportion dismissive of pensions salespersons, as more concerned with commission than with supplying a good-value and appropriate product, also rose substantially. The greatest degree of agreement in 2002 was with the statement that the State should provide for everyone a pension sufficient for a comfortable retirement, but almost as many thought that the state pension is, or will be, insufficient to support them in retirement. This suggests that politicians can expect a lot more pressure from voters for the state pension to increase.

The proportions wanting more certainty about the relationship between pension contributions and the eventual annual pension, and believing that the Government should guarantee a final pension in relation to the contributions made, also rose between 2000 and 2002. Over half agreed that the Government does not spend enough on pensioners, and almost four in ten agreed that political parties will have to promise to look after the elderly. The 2002 survey reveals a public that is confused about pensions, and coming to the view that the Government needs to act as a guarantor for additional pensions, as well as a provider of adequate basic pensions for all.

COMPANY PROFILES

Royal & Sun Alliance has the largest total sum in individual pension funds, but no longer accepts new pensions business. The Prudential focuses on annuities. Companies based abroad — including Zurich Financial Services of Switzerland, Aegon of the Netherlands and AXA of France — are important among the continuing pension sellers. In 2000, three mutuals were among the leaders in UK pensions: Equitable Life, Friends Provident and Standard Life. Since then, Equitable Life hovers on the margins of solvency; Friends Provident has demutualised into a troubled market; and Standard Life has been unable to avoid bonus cuts and exit charges. Companies that have the scale to cross-subsidise pensions from more lucrative short-term activities are best placed to persist in this market. However, they are few in number. In 2000, they included Allianz of Germany and AXA, but even these giants suffered in 2001 and 2002. This report includes profiles of Aegon, Aviva, AXA, Equitable Life, Friends Provident, Legal & General, Life Assurance Holding Corporation, Lincoln National, Lloyds TSB, Marks & Spencer Financial Services, Prudential, Royal & Sun Alliance, Standard Life, Virgin Money and Zurich Financial Services. The companies have been chosen to represent the mix of UK and foreign, quoted and mutual organisations in the pensions sector.

THE FUTURE

The many ideas being explored before the appearance of the Government's Green Paper on pensions included:

a 'national minimum pension contribution' as an integral part of the national minimum wage

requiring all employers to contribute a minimum percentage of salary to employees' pensions

enabling people to draw their pension in stages while continuing to work, avoiding the complete break between work and retirement that is usual today

limiting the pensions paid to senior executives to make more money available for the pensions of ordinary workers

encouraging low earners to save by the Government matching their pension contributions pound for pound

changing annuity regulations so that purchasers can bequeath them to descendants.

The All Party Pensions Reform Group, chaired by Frank Field MP, wants to simplify pensions by introducing a 'Universal Protected Pension' (UPP) well above the poverty level. A UPP would let the private sector, including mutuals, offer top-up pensions, rather than just pensions necessary for survival.

Voters could force the pensions issue by paying much closer attention to pensions promises in party manifestos, and by refusing to re-elect MPs who do not listen to voters' pension worries. Pension providers need to consider pensioners' politics because the consequences of pensioner power at the ballot box could change the commercial and social environments in which companies work.

TABLE OF CONTENTS

Table of Contents:

Executive Summary

INTRODUCTION 1

STRATEGIC OVERVIEW 1

MARKETING TRENDS 1

THE STATE PENSION 2

PERSONAL PENSIONS 2

ANNUITIES 2

OCCUPATIONAL PENSIONS 3

AN INTERNATIONAL PERSPECTIVE 3

PEST ANALYSIS 3

CONSUMER DYNAMICS 4

COMPANY PROFILES 4

THE FUTURE 5

1. Introduction

THE TOPIC 6

OBJECTIVES 6

ORIGINAL RESEARCH 6

Problems in the Research Process 6

DEFINITION 7

2. Strategic Overview

MARKET DYNAMICS 8

Pensions in Peril 8

The Market for Pensions — Long-Term Gambling 8

Joe’s Pension — A Hypothetical Example 9

Mass Pensions May Not Be Profitable 10

Premium Income Rises, But Not Enough to Plug Savings Gap 11

Table 1: Pension Premium Income for New and Continuing Policies Handled by UK Insurers by Category (£m), 1997-2001 12

Figure 1: Pension Premium Income for New and Continuing Policies Handled by UK Insurers by Category (£m), 1997-2001 13

Slowing Down 14

Table 2: Annual Premium Equivalent Income in the UK (£m and %), 1997-2002 14

Figure 2: Annual Premium Equivalent Income in the UK

(£m), 1997-2002 15

Table 3: New Long-Term Insurance Business by Category (£m and %), First Quarter 2000-Third Quarter 2002 16

Table 4: Difference Between Pension Premiums Received and Pension Benefits Paid Out by Insurers in the UK (£m and %), 1997-2001 17

Modest Contributions 17

Table 5: UK Weekly and Yearly Pension and Life Assurance Contributions per Household and National Expenditure (£ and £bn), 2000/2001 18

PENSION SCHEME MEMBERSHIP 18

The Great Unpensioned 18

Table 6: Pension Provision by Sex by Employment Status by Age (%), 1999/2000 19

State Pensions Take 5% of GDP 20

Table 7: Projected UK Public Spending on Pensions by Category (% of GDP), 2000, 2010, 2020, 2030, 2040 and 2050 20

DISTRIBUTION — INDEPENDENTS DOMINATE 21

Table 8: Distribution of New Single Premium Individual Pensions in the UK by Sales Channel (£m gross premiums and %), 1997-2001 21

Table 9: Distribution of New Regular Premium Individual Pensions in the UK by Sales Channel (£m gross premiums and %), 1997-2001 22

COMPETITIVE STRUCTURE 23

Group With Largest Funds Closes to New Business 23

Table 10: Estimated Size of Leading UK Individual Pensions Funds by Company (£m and %), August 2000 and October 2002 24

Orphan Assets Destined For Contingencies? 25

ADVERTISING STEEPLY DOWN 25

PUBLIC OPINION: PESSIMISTIC AND CONFUSED 26

WHAT NEXT? 27

3. Marketing Trends

ADVERTISING AND PROMOTION 29

Advice Promoted to a Confused Public 29

Table 11: Main Media Advertising Expenditure on Pensions by Type of Product (£000 and %), Years Ending March 2000 and June 2002 30

Table 12: Main Media Advertising Expenditure on Major Pension Products in the UK by Company (£m and %), Year Ending December 1995 31

Decline in Pensions Advertising During 2001/2002 31

Table 13: Main Media Advertising Expenditure on Pension Products by Category (£000 and %), Year Ending June 2002 and Second Quarter 2002 32

Major Companies Stop Spending 33

Table 14: Main Media Advertising Expenditure by Leading Pensions Advertisers (£000 and %), Year Ending June 2002 and Second Quarter 2002 33

Early Release, Not New Saving 34

DIRECT MAIL 35

Direct Mail More Important in the Marketing Mix 35

Table 15: Total Advertising Expenditure and Direct Mail Expenditure in the UK

(£m and %), 1989-2001 35

Signs of Retrenchment in Pensions Direct Mail 36

4. The State Pension

MORE SURVIVORS 38

5. The State Earnings-Related Pension Scheme

GRADUATED BENEFITS AND SERPS 39

New State Second Pension 40

PENSION CREDITS 40

6. Personal Pensions

PROBLEMS OF COMPLEXITY AND COST 42

Table 16: Contribution Limits for Personal Pensions in the UK by Age (%), 2002/2003 43

STAKEHOLDER PENSIONS 44

Pensions for All — Even Children 44

Individual Pension Accounts and Self-Invested Personal Pensions 45

7. Annuities

STEEP RISE IN PURCHASE COSTS 46

INVESTMENT-LINKED ANNUITIES FOR BETTER-OFF (BUT THEY CAN

MAKE YOU WORSE OFF) 47

Standard 47

Investment Linked 47

BIG DIFFERENCES IN ANNUITY RATES 48

Table 17: Top Annuity Rates by Age by Sex by Company (£), August 2000 and October 2002 49

8. Occupational Pensions

SERPS IMPROVED OCCUPATIONAL SCHEMES — PROBABLY TOO MUCH 51

Table 18: Number of Occupational Pension Schemes in the UK (number of live schemes and %), 31st March 2001 and 2002 52

Table 19: Types of Occupational Pension Schemes in the UK

(number of live schemes),

31st March 2002 53

FINAL-SALARY SCHEMES TOO COSTLY 54

BIG PAY CUT IN PROGRESS 55

TINKERING OR RADICAL

CHANGE? 57

9. An International Perspective

MORE PENSIONERS, FEWER WORKERS 58

Table 20: Ratio of Pensioners to the Working Population in Selected European Countries (%), 1980, 1990, 2000 and 2030 58

BANKING ON LARGER SAVINGS 59

MEXICAN PENSION WAVE 61

DOUBLE-DIPPING AUSTRALIA 61

PRIVATE IN CHILE 62

INTERNATIONAL INFLUENCES 62

10. PEST Analysis

POLITICAL FACTORS 64

Green Paper — Work Right on to the End of the Road 64

Lasting Impact of Axing Tax Rebates 66

ECONOMIC FACTORS 66

Chancellor Forced to Borrow More 66

Dangerous Debt 67

Table 21: UK Household Sector Savings Compared With Net Lending to Individuals (£m and ratio), 1998-Second Quarter 2002 68

Table 22: Change in Net Equity of Households in Pension Funds Compared with Net Lending to Individuals in the UK (£m), 2000 and 2001 69

Property Mania 69

Modest Earnings 70

Table 23: Estimated Income Distribution by Gender by Range of Total Income Before Tax (£, 000 and %), 2002/2003 70

Polarised Wealth 71

Table 24: Distribution of Wealth Including Dwellings in the UK (estimated % of marketable wealth held), 1976, 1998, 1999 and 2002 71

Table 25: Distribution of Wealth Including Dwellings in the UK (estimated % of marketable wealth held), 1976, 1998, 1999 and 2002 72

Occupational Pensions Significant 73

Table 26: Profile of Pensioner Households in Great Britain by Amount of Savings Compared With Households Overall, (£, million and %), 1999/2000 74

Financial Services Authority Projection Rates Are Too High 74

Table 27: Pension Funds’ Performance Ranked by Category Size (£m and %), Years Ending 1st October 1998-2002 75

SOCIAL FACTORS 76

Pensioners More Aware of Political Power 76

Table 28: UK Population by Sex by Age (million), 1901, 1931, 1961, 1991, 2000, 2011 and 2025 77

TECHNOLOGICAL FACTORS 78

11. Consumer Dynamics

OVERVIEW 79

Pensions Questions — a Recipe for Confusion 79

Table 29: Overall Levels of Agreement With Statements About Pensions (% of respondents), 1997, 2000 and 2002 80

Table 30: Ranking of Agreement With Statements About Pensions (% of respondents), 1997, 2000 and 2002 82

Additional Statements 83

Table 31: Overall Levels of Agreement to Additional Statements About Pensions (% of respondents), 2000 and 2002 84

2002 NOP RESULTS 85

Table 32: Summary of Agreement With Statements About Pensions (% of respondents), 2002 85

Pension Pressures On The Over-45s 86

Young Not Bothered About Pensions 87

S1: “The State should provide for everyone a pension that is sufficient for a comfortable retirement.” 87

S2: ”I think the state pension is, or will be, insufficient to support me in retirement.” 88

Table 33: Agreement With Statements About State Pension Sufficiency (% of respondents), 2002 89

Fifty:Fifty Split On Government Spending 91

S3: “The Government does not spend enough on pensioners.“ 91

S4: ”People contributing to personal pension plans should know in advance what annual income to expect from their pension fund when they retire.” 91

Table 34: Agreement With Statements About Government Spending, and Annual Income (% of respondents), 2002 92

Affluent Press For Pension Guarantees 94

S5: ”The State should guarantee a final pension in relation to contributions made.” 94

S6: ”I have had to, or expect I will have to make more provision for my retirement than my parents did.” 94

Table 35: Agreement With Statements About Government Guarantees and Higher Contributions (% of respondents), 2002 95

Pension Sales Pressure Under Fire 97

S7: ”I think people who sell pensions are more concerned with their commission than with ensuring they supply a suitable pension plan.“ 97

S8: “Political parties will have to promise to look after the elderly because pensioners’ votes could sway a general election.” 97

Table 36: Agreement With Statements About Commission Selling and Political Influence (% of respondents), 2002 98

People Over Confident About Pensions Knowledge 100

S9: ”It is unclear how much should be contributed on a regular basis to a pension scheme to ensure a comfortable retirement.“ 100

Declining Confidence In State Pension 100

S10: ”The state pension will cease to exist within 20 years.” 100

Table 37: Agreement With Statements About Regular Contributions and the Future of State Pension (% of respondents), 2002 101

Opposition to Compulsory Contribution 103

S11: ”It should be compulsory for individuals to make contributions to a pension plan.” 103

Reluctance to Admit to Pensions Ignorance 104

S12: ”I don’t really understand pensions.” 104

Table 38: Agreement With Statements About Compulsory Savings and Understanding of Pensions (% of respondents), 2002 105

Uncertainty and Tax Relief 107

S13: ”I am, or have been in the past, reluctant to contribute to a personal pension because, at the outset, it is unclear what the size of the pension will be on retirement.” 107

S14: ”Tax savings on pension contributions outweigh the disadvantages of not knowing how much a pension will be worth on retirement.” 107

Table 39: Agreement With Statements About Reluctance to Contribute and Tax Reliefs (% of respondents), 2002 108

Acceptance of 70 as State Pension Age 110

S15: “I think the qualifying age for the state pension should be raised from 65 to 70.” 110

Table 40: Agreement With Statements About Raising Qualifying Age for State Pension (% of respondents), 2002 111

12. Company Profiles

INTRODUCTION 113

ACTUARIAL NIGHTMARES 113

LEADING COMPANIES 114

Table 41a: Comparative Ratios of Selected Leading Pension Providers (%), Year Ending 31st December 2001 115

Table 41b: Financial Criteria and Ratios of Selected Leading Pension Providers (days, % and £), Year Ending 31st December 2001 116

AEGON UK — THE FAMILY GAP 117

Corporate Strategy 117

Advertising and Distribution 117

Profitability 118

Table 42: Financial Results for Scottish Equitable PLC (£m and %), Years Ending 31st December 1995-1999 118

Future Developments 118

AVIVA — LOOKING TO EASTERN EUROPE 119

Corporate Strategy 119

Advertising and Distribution 119

Profitability 120

Table 43: Financial Results for Aviva PLC (£m, pence and %), Years Ending 31st December 1997-2001 121

Future Developments 122

AXA GROUP — GOING FOR THE GROUP MARKET 122

Corporate Strategy 122

Advertising and Distribution 122

Profitability 123

Table 44: Financial Results for AXA Sun Life PLC (£m), Years Ending 31st December 1997-2001 123

Future Developments 124

FRIENDS PROVIDENT — BAD LUCK GIVES THAT SINKING FEELING 124

Corporate Strategy 124

Advertising and Distribution 125

Profitability 125

Future Developments 125

LEGAL & GENERAL — FORGING PARTNERSHIPS 126

Corporate Strategy 126

Advertising and Distribution 126

Profitability 127

Table 45: Financial Results for Legal & General Group PLC (£m, pence and %), Years Ending 31st December 1997-2001 128

Future Developments 128

LIFE ASSURANCE HOLDING CORPORATION — TOUGH TIME

FOR RESTRUCTURING 129

Corporate Strategy 129

Advertising and Distribution 129

Profitability 129

Table 46: Financial Results for Life Assurance Holding Corporation Ltd (£m and %), Years Ending 31st December 1996-2000 130

Future Developments 130

LINCOLN NATIONAL (UK) — CONCENTRATING ON CURRENT CUSTOMERS 131

Corporate Strategy 131

Advertising and Distribution 131

Profitability 131

Table 47: Financial Results for Lincoln National (UK) PLC (£m and %), Years Ending 31st December 1997-2001 132

Future Developments 133

LLOYDS TSB — BAD NEWS FROM SCOTTISH WIDOWS 133

Corporate Strategy 133

Advertising and Distribution 134

Profitability 134

Lloyds TSB Group PLC 134

Table 48: Financial Results for Lloyds TSB Group PLC (£m, pence and %), Years Ending 31st December 1997-2001 134

Scottish Widows PLC 135

Table 49: Financial Results for Scottish Widows PLC (£m and %), Years Ending 31st December 2000 and 2001 136

Abbey Life Assurance

Company 136

Table 50: Financial Results for Abbey Life Assurance Company Ltd (£m and %), Years Ending 31st December 1997-2001 137

Future Developments 137

STANDARD LIFE — TOO MANY EQUITIES FOR TOO LONG? 138

Corporate Strategy 138

Advertising and Distribution 138

Profitability 139

Table 51: Financial Results for Standard Life Assurance Company (£m and %), Years Ending 15th November 1997-2001 140

Future Developments 140

ZURICH FINANCIAL SERVICES — PULLING THE PLUG ON EXPANSION 141

Corporate Strategy 141

Advertising and Distribution 141

Profitability 141

Table 52: Financial Results for Zurich Financial Services Ltd (£m and %), Years Ending 31st December 1997-2001 142

Future Developments 142

FALSE SECURITY — THE EXAMPLE OF EQUITABLE LIFE 143

Corporate Strategy 143

Advertising and

Distribution 143

Profitability 144

Table 53: Financial Results for The Equitable Life Assurance Society

(£m and %), Years Ending 31st December 1997-2001 144

Future Developments 145

ANNUITIES AND OVERSEAS EXPANSION — THE EXAMPLE OF PRUDENTIAL 145

Corporate Strategy 145

Advertising and Distribution 146

Profitability 146

Table 54: Financial Results for Prudential PLC (£m, pence and %), Years Ending 31st December 1997-2001 147

Future Developments 148

HIGH STREET PENSIONS — THE EXAMPLE OF MARKS & SPENCER FINANCIAL SERVICES 149

Corporate Strategy 149

Advertising and Distribution 149

Profitability 149

Table 55: Financial Results for Marks & Spencer Financial Services PLC (£m and %), Years Ending 31st March 1998-2002 150

Future Developments 150

NEW GENERATION DIRECT SELLER — THE EXAMPLE OF VIRGIN MONEY GROUP 150

Corporate Strategy 150

Advertising and Distribution 151

Profitability 151

Table 56: Financial Results for Virgin Money Group Ltd (£m and %), Years Ending 31st December 1996-2000 152

Future Developments 152

GETTING OUT OF PENSIONS — ROYAL & SUN ALLIANCE INSURANCE GROUP 152

Corporate Strategy 152

Advertising and Distribution 153

Profitability 153

Table 57: Financial Results for Royal & Sun Alliance Insurance Group PLC (£m, pence and %), Years Ending 31st December 1997-2001 154

Future Developments 155

13. The Future

SQUEEZE ON MIDDLE BRITAIN 156

WHAT THE GOVERNMENT CAN DO 156

THE UNIVERSAL PROTECTED PENSION: A REALISTIC OPTION 157

THE PROPERTY MARKET’S CENTRAL ROLE 158

WHAT VOTERS COULD DO 160

Lobby Politicians 160

Ways to Ease Financial Burdens 160

MARKET PROSPECTS 161

Table 58: Actual and Forecast UK New Personal Pensions Business: Slow Growth Scenario at Current Prices (£m and %), 1999-2006 162

Table 59: Forecast UK New Personal Pensions Business: Slow Growth Scenario at Constant 2002 Prices (£m and %), 2002-2006 163

Figure 3: Forecast UK New Personal Pensions Business: Slow Growth Scenario at Constant 2002 Prices (£m), 2002-2006 164

14. Glossary

15. Further Sources

Associations 169

Publications 170

General Sources 170

Bonnier Information

Sources 171

Government Publications 172

Other Sources 173

Key Note Research

The Key Note Range of Reportsrporate Strategy 133