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L&G unveils pension solutions as annuity sales plummet

L&G unveils pension solutions as annuity sales plummet

Legal and General has unveiled plans to build up a trio of pension product solutions, including expanding on its recently acquired presence in the equity release market, as its latest results show individual annuity sales plummeted more than 50 per cent in 2014.

Published today (4 March), the results reveal individual annuity sales were down 54 per cent to £591m last year, following the 2014 Budget changes. It expects this market to “remain subdued” in 2015 and anticipates volumes to be down a further 50 per cent in 2015.

L&G acquired New Life Home Finance last month for £5m and today, L&G’s results reveal how it intends to use the acquisition to grow a substantial foothold the equity release market.

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The insurer reveals it will it also launch a “cash-out retirement plan”, which provides a “simple mechanism” by which consumers can access their retirement savings. Consumers can withdraw agreed fixed amounts over a set period to fund immediate spending requirements, or minimise tax by taking withdrawals over a longer term.

Lastly, a “fixed-term retirement plan” converts a portion of an individual’s retirement savings into contractual payments over a period of their choosing, returning a pre-agreed lump sum amount to the customer at the end of the fixed term.

Its results also showed that, like other providers, it has seen an increase in bulk annuity sales, jumping to almost £6bn last year, compared with £2.8bn in 2013. This meant that, despite the fall in individual sales, overall assets in annuities increased from 2013’s figure of £34.4bn to 2014’s figure of £44.2bn.

Elsewhere, the firm’s profit before tax was up 8 per cent to £1.29bn and it has delivered earnings per share up 10 per cent to 16.7 pence.

Its operating profit was up by 10 per cent to £1.28bn compared to last year’s figure of £1.16bn.

L&G’s outlook also warned that in terms of consumer regulation, there “remains a need for greater regulatory certainty to providing consumer guidance and addressing the advice gap in a post-Retail Distribution Review and an increasingly digital world”.

ruth.gillbe@ft.com