Standard Life has seen a 50 per cent fall in its annuity sales following the radical pension changes announced in the Budget, according to its latest interim results.
In an interim management statement, the firm says: “Changes to annuity regulations in the UK resulted in a reduction in our UK annuity sales of around 50 per cent following the Budget announcement.
“While it will be some time before long-term trends become clear, the negative profit impact of the changes will reflect the relatively small size of our annuity business.”
Standard Life’s results also revealed that in the first three months of the year, assets under administration grew 1.5 per cent to £247.8bn, driven by net inflows of £2.4bn and particularly strong inflows across its flagship multi-asset Gars range.
David Nish, chief executive, said: “Although investment markets and exchange rates may affect the pace of growth, and there will be some negative impact from changes to annuity regulations in the UK, we remain very well positioned for the future and look forward with confidence to delivering growing returns for our shareholders.”
Yesterday (29 April), MGM Advantage announced that it will be making 80 redundancies and will be launching a “radical new proposition” after admitting it “would be madness” to ignore the radical pension changes announced in the Budget.
A spokesperson for MGM told FTAdviser that the group does not believe the annuity market will pick up again to pre-Budget levels following the chancellor stating that no one needs to buy an annuity in his Budget speech.
Since the Budget, there has been speculation as to how much the annuity market will shrink, with RBC Capital Markets predicting the annuity market this market would shrink 90 per cent.
Barclays called it a “game changer” that had “the potential to lead to the demise of the UK individual annuity market”. It forecast that the value of new individual annuity business would shrink from £12bn a year to £4bn by 2015.
