SJP and Standard Life are pension freedom winners

SJP and Standard Life are pension freedom winners

Standard Life and St James’s Place are “best placed” to cope with the new pension freedoms landscape, while Scottish Widows and Aegon may struggle, according to a new report by Moody’s Investors Service.

The research found that the UK life insurance sector is becoming increasingly polarised, with some better equipped than others to cope with challenges arising from the pension reforms.

The 6 April pension reforms will lead to operational and reputational risks for some insurers, as they are challenged to make their systems compliant, noted Moody’s.

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Asset managers and digital investment specialists - who have the most to gain from the pension reforms - will compete with insurers to sell new retirement products and retain maturing pension assets.

Dominic Simpson, a Moody’s vice president and senior credit officer, explained that key competitive advantages to combat these headwinds include sizeable in-house asset management capability, scale in order to exploit growing defined contribution pensions, strong distribution capabilities, bulk annuities and equity release expertise, plus a strong income drawdown proposition.

The analysis stated that among those best positioned to cope with the new landscape are Standard Life and St James’s Place, due to their high ability to grow cash generation and more than replace any lost new business value from individual annuities, with low execution risk.

Jamie Jenkins, head of pensions strategy at Standard Life, told FTAdviser that the key thing for them once the Budget changes were announced was having the right components already, listing auto-enrolment and self-invested personal pensions, plus the wrap and investment capabilities.

“Since the reforms were implemented we had around 10,000 people in the first few week actually doing something, but mostly on pots worth less than £10,000 so that’s only around 3 per cent of the 560,000 customers over 55 in a pension that could have done something.

“That means there’s a large number who are still working, but might be getting more engaged in their retirement options; that’s a huge opportunity.”

Companies such as Aviva UK life, Legal and General and Prudential UK life have a medium ability to grow or maintain cash generation, whereas Scottish Widows’ and Aegon’s ability is low, with high execution risk, Moody’s added.

A spokesman for Aegon responded: “We have a robust proposition and are confident that our strategy allows us to meet the challenges in a post pension reform world. We will continue to implement our strategy and be a strong and competitive innovator.”

A spokesperson for Scottish Widows, said: “We do not agree with this assessment. Scottish Widows has a very clear strategy in place that will allow us to adapt to, and take advantage of changing customer needs.

“Evidence of this includes the work we have carried out to enable our customers to benefit from pension freedoms.

“We are confident that our continued investment in our corporate pensions and retirement platforms, bulk annuity capabilities and launch into the intermediary protection market will put us in an even stronger position.”