12th May 2015 07:40
LONDON (Alliance News) - Just Retirement Group PLC Tuesday reported a 15% decrease in annuity sales for the first nine months of its financial year, but Chief Executive Rodney Cook said the result was "creditable" in light of new UK pensions rules that removed the effective requirement on individuals to convert their pensions pots into guaranteed income in retirement.
The reforms were introduced by Chancellor of the Exchequer in 2014 and came into force in April this year. Just Retirement has increased its emphasis on defined benefit scheme de-risking for companies to offset the hit to individual annuities sales.
In a statement, the specialist annuities provider said total sales fell to GBP1.10 billion in the nine months ended March 31, compared with GBP1.40 billion in the corresponding period of the prior year. Within that decline, annuities sales fell to GBP874.6 million from GBP1.03 billion, as a 59% fall in sales of individual annuities was only partly offset by an increase of more than tenfold in defined benefit de-risking sales.
Total sales for the third-quarter fell to GBP276.1 million from GBP497.3 million a year before.
"The period before the introduction of the new pension freedoms was always likely to be tough for our industry, and so it has proved. Under the circumstances, I believe the 15% decline in total annuity sales which we are announcing today is a creditable performance," Cook said in a statement.
The CEO said the group's defined benefit team had its second best ever quarter by volume to date, increasing to GBP93.3 million from GBP37.0 million, with a strong pipeline remaining.
"I believe medical underwriting is progressively becoming the default choice for employee benefit consultants seeking best value for the trustees of smaller schemes. We expect to deliver further growth in this area in coming years," Cook said.
Cook said the group is "comfortable" with sales expectations for the year as a whole.
Just Retirement shares were down 0.6% at 174.00 pence on Tuesday morning.
By Samuel Agini; [email protected]; @samuelagini
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