PensionsMay 12 2015

Royal London boasts business boost from 6 April

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Royal London boasts business boost from 6 April

Group pension sales continued to gain momentum at Royal London, with a 16 per cent increase on 2014, which was a record year for the provider’s sales of workplace pensions.

The group’s new business results for the three months ending 31 March 2015 revealed total continuing new life and pensions business was up 40 per cent at £1.37bn, compared with £988m in March 2014.

Group pension sales hit £515m - up 16 per cent - while individual pensions hit £474m - up 68 per cent - drawdown reached £244m - up 67 per cent - protection sold through intermediaries was £107m - up 32 per cent - and protection direct to consumer was £5m - up 400 per cent.

Sales of Royal London’s integrated drawdown facility increased by 67 per cent.

Meanwhile, the Ascentric platform reached £9.53bn in assets under administration at the end of the first quarter - a 7 per cent increase on the end of 2014 - with gross inflows of £555.7m.

The arrival of pension freedoms on 6 April saw a dramatic increase in self-invested personal pension business for Ascentric during the first quarter, with income drawdown applications increasing by over 80 per cent on the same period last year.

Phil Loney, group chief executive of Royal London, said that market share was increased in the key areas of pensions and protection.

“We have invested considerable time and resource in developing our protection proposition for intermediary distribution, for example by introducing smarter underwriting and giving greater clarity to our critical illness definitions.

“Individual and group pensions continue to build market share, again on the basis of the quality of these award-winning propositions,” he continued, adding that the firm has begun to see the emergence of a ‘secondary market’ in corporate schemes set up to meet the employer duties for auto-enrolment.

Mr Loney also welcomed the appointment of Ros Altmann as pensions minister and called on her to prioritise:

1. The rapid introduction of a new “cheap and cheerful” regulated advice regime which makes focused financial advice affordable for all and ensures that the pension freedoms achieve their true potential.

2. A thoughtful review of the current system and levels of tax relief available on pension contributions before any changes are made. It is simply not fair that income which is saved for the future should be taxed twice.

3. A gradualist approach to increasing the level of contributions that employees make to auto enrolled pension schemes so that we nudge younger savers, with help from their employers, towards saving around 15 per cent of income that is generally needed to properly provide for later life.

4. Legislation to make an open market approach to annuity sales compulsory so that customers can access the best deals available - this should also ensure that consumers are protected when engaging in any secondary annuity market through a requirement to obtain financial advice before cashing in their annuity.

5. Consolidating the Money Advice Service and The Pension Advisory Service into a single truly excellent financial education service for all, which works hand in hand with advisors and providers to build financial literacy.

emma.hughes@ft.com