Royal London slams "unsustainable commission" on group pensions
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Royal London has blamed “unsustainable commission” rates being paid by its rivals on group pensions business for distorting the market, after group pensions new business at Scottish Life dropped 19 per cent.
In its new business results, published today, Royal London blames commission tactics by its competitors for the group pensions market remaining tough.
Scottish Life saw the present value of new business premiums on group pensions fall 19 per cent from £422m in 2008 to £342m in 2009.
It says: “The group pensions market continues to be difficult and there are still serious issues with unsustainable commission rates being paid by some companies, which distort the current market.”
But Royal London expects this to improve in 2010 as the retail distribution review draws closer.
Scottish Life total new business was up 4 per cent on 2008, from £1.52bn to £1.58bn, while individual pensions new business was up 18 per cent from £889m to £1.05bn.
Royal London Asset Management saw new business drop 20 per cent in 2009 from £734m to £589m.
Royal London says the offshore market was also challenging in 2009, with sales down around 40 per cent across the market, although it has not produced new business comparisons, as its international business Royal London 360 was formed at the start of 2009.
The Ascentric wrap saw new assets under administration increase 111 per cent from £199m to £421m.
Bright Grey saw new business down 8 per cent from £181m to £167m.
Royal London group chief executive Mike Yardley says: “These are excellent results overall, in what has been a very difficult year for the life and pensions industry.
“Our expectation is that the majority of companies will be reporting a marked decline in new business levels.”
Readers' comments (5)
David Reilly | 3 Feb 2010 11:51 am
Hmm - this seems to suggest that IFAs might be swayed by commission when recommending a group scheme provider.
I find this hard to believe....
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paul ormerod | 3 Feb 2010 12:13 pm
..or that Scot Life pay the Sqr root of nothing in comm. There nil comm AMC is higher the Scot Eq on 4% level comm !!
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Anonymous | 3 Feb 2010 12:16 pm
Given the stringent rules and regulations within the pensions industry would it not be simple to have a standard level payment system for all providers.
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Anonymous | 3 Feb 2010 2:59 pm
They have no room to talk when you consider the sucicidal price they charge for their Individual contract just to undercut everyone else. Is this not buying business in a different guise.
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john | 3 Feb 2010 9:11 pm
They have a choice. They can put up or shut up.employers have voted with their wallets in recent years and have stopped paying fees in their droves. These guys should be working for the FSA
Because of firms such as this we will all have to go back to pre Stakeholder structures. Clients will not pay fees.
Horrible
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