Several major issues governing the future of the market are considered in this report. These include the raising of the state retirement age and the decline of the state pension; the creation of a single European market for financial services; FSA regulation and competition; discrimination by insurance providers; and genetic testing and its use in underwriting.
INCREASE IN THE ELDERLY POPULATION
Between 1961 and 2001, the number of people in the UK aged over 65 increased by 51%. By 2011, the number is projected to be 10.3 million, which will represent 17.1% of the total population. The working-age population will grow very slowly in comparison, so the proportion of the population that is over 65 and/or retired will increase steadily into the 21st century.
Expectation of life at all ages is rising, such that the demand for guaranteed long-term income products is likely to increase, as is demand for financial management services to ensure efficient use of capital and sensible saving.
The majority of those aged over 65 are women, and women have different needs to men in the financial services market owing to longer life expectancy and lower incomes on average. They can expect lower annuity rates and higher health insurance premiums, but it remains to be seen whether the market can adapt to the increase in financially independent women earning salaries equal to their male contemporaries.
Summary
CONSUMER TRENDS
The survey commissioned by Key Note from BMRB Access exclusively for this report found that there were significant levels of difficulty experienced by consumers in understanding and comparing financial products and services. This was more true of the pre-retirement group (aged 55 to 64) than of most others.
Generally, it emerged that the pre-retirement group and the over-65s have markedly different attitudes to a number of key issues in the financial products and services market. For example, pre-retirement consumers are much more likely to seek financial advice when making a decision to buy or change a financial service or product, while the over-65s were significantly less likely to do so than the sample average.
A major finding was that, in general, consumers are more happy to buy financial products over the Internet than over the telephone. There is, however, still resistance among consumers aged over 55 to the idea of buying without a face-to-face meeting or otherwise by non-traditional means.
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