"We are also concerned that some providers may be “sleep-walking” their existing non-advised pension customers into their own in-house drawdown offerings"
Intermediary pensions and drawdown new business sales were up by 64% to £2.9bn, which Royal London says reflects growth in the overall market size and introductions to its proposition, particularly the Drawdown Governance service. The firm also experienced a net increase in individual pensions business from the FCA's introduction of the early exit charge cap.
Group pensions new business sales via intermediaries rose by 32% to £2.5bn. Royal London predicts a slowdown in workplace pensions going forward and therefore expects lower group pensions business in H2.
In its results, Royal London says: "The secondary market, where advisers recommend schemes move to take advantage of better quality scheme administration or investment options, has slowly started to emerge and we will increasingly focus on this market going forward."
Intermediary protection new business sales increased by 34% to £384m following continued growth in the market.
Royal London's total EEV pre-tax profits rose by 34% to £185m.
Phil Loney, Group Chief Executive of Royal London, said: “We continue to invest in our capabilities to increase value for money for customers and to make it easier for their advisers to do business with us. For example the new Royal London Review Service launched in July 2017 automatically collates all Royal London pensions information for advisers into individual tailored client reports; advisers are then able to focus their time on providing important advice and recommendations for their clients based on this insight.
“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. We are pleased that the FCA is looking at this area more closely, and our view is that they should do more to encourage individuals to take impartial financial advice when contemplating income drawdown.
"We are also concerned that some providers may be “sleep-walking” their existing non-advised pension customers into their own in-house drawdown offerings, repeating some of the poor practice seen in the historic annuity market. Royal London intends to develop a better value for money drawdown offering and tools for those clients who insist on the non-advised route, but such competition will only be a viable solution if the FCA takes action to open this part of the market up to competition.
“We also believe that the Pensions Dashboard has the potential to boost competition in the UK pensions market. It is an important project designed to help customers by allowing savers and their advisers to have a comprehensive view of their pension savings and entitlements in one place to determine their retirement income. The dashboard could also provide a useful starting point for those advisers and customers seeking to obtain better value for money by consolidating numerous small pension pots."
