Royal London has reported significant jumps in its retirement business for the first half of the year as the sector continues to reap the rewards of pension freedoms.
In a statement today (17 August), the mutual life company announced a 45 per cent increase in its life and pensions business for the period.
New life and pensions business was £6bn at 30 June 2017, compared with £4.2bn for the same period last year, on a present value of new business premiums basis.
This helped Royal London to increase profits in the first half of 2017 by 34 per cent to £185m, compared with £136m for the same period in 2016.
The company said the growth in this business reflected the fact the overall market is expanding.
Leading the charge at the company was individual pensions and drawdown new business sales, which were up by 64 per cent to £2.9bn.
Phil Loney, group chief executive at Royal London, said: “Recent FCA data confirmed a significant rise in income drawdown business across the market since the introduction of 'Pension Freedoms' in 2015.
"The data revealed a particular surge in non-advised drawdown sales; we think this is concerning as the best outcome for customers when choosing an income drawdown strategy generally occurs when they take financial advice, as the decisions are complex and can form a significant part of an individual's retirement income.”
Group pension new business sales were up 32 per cent, to £2.5bn. Royal London stated it has long expected a slowdown in workplace pensions business as auto enrollment has largely happened.
There was growth of 6 per cent in assets under management in the Royal London Asset Management business, bringing the total to £106bn.
The Ascentric platform saw assets under administration increase by 9 per cent to £13.4bn, when compared with the end of December 2016.
Royal London introduced what it calls a “simplified” pricing structure for the platform in the first half of 2017. The company said this has led to a “significant increase” in the number of self invested personal pension accounts set up on the platform.
"The strong new business performance in the first half of the year reflects growth in the overall market size and significant success in our proposition, particularly the drawdown governance service," the company stated.
It added: "In addition to these factors, we have also experienced a net increase in individual pensions business from the Financial Conduct Authority's (FCA) introduction of the early exit charge cap, primarily through our focus on offering products which are good value for money."