9th Apr 2014 08:38
LONDON (Alliance News) - Just Retirement Group PLC Wednesday said it now expects total premium income from defined benefits de-risking to be at least GBP80 million in the current financial year, after it won new contract including its biggest deal to date, but it also issued a warning about its sales outlook due to the impact of George Osborne's reforms of the annuity market.
In a statement, the annuity provider which listed last November said its underwritten defined benefits de-risking division had completed contracts on a deal that represents GBP36.5 million of single premium income as well as a number of smaller transactions.
"At our half year results in February, we flagged the potential for more defined benefits transactions and we are pleased to be announcing our largest underwritten transaction to date representing GBP36.5 million of single premium income," Chief Executive Rodney Cook said.
However, the company also warned that the 7% increase in full year sales that it had also predicted in February was "no longer appropriate" due to a high degree of uncertainty in the annuities market.
Its current financial year runs until June 30.
In his budget statement last month, Chancellor of the Exchequer George Osborne did away with compulsory annuities, giving people far more control and flexibility over how they manage their pension pots as they plan for retirement.
From April 2015, the government will change the tax rules to allow people to access their defined contribution pension savings as they wish from the point of retirement. The government has published a consultation on how to implement the changes.
"Although it is very early days, our current trading suggests that the Budget has had a material effect on individually underwritten annuity volumes," Cook said in the statement.
"As financial advisers and customers come to terms with the new environment we are optimistic that large numbers of them will continue to secure a guaranteed lifetime income in retirement, particularly if the new guidance concept is effectively implemented," he added.
The company said it would update the market further when it gives an interim management statement on May 12.
Shares in annuity providers plummeted on the day Osborne announced his reforms, with Just Retirement dropping 43%. However, Just Retirement's shares were up 1.6% at 149.9 pence Wednesday morning.
By Steve McGrath; [email protected]; @SteveMcGrath1
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