The ABI’s latest new business figures show a marked year on year growth in life and pension sales for the first quarter of 2007.
Total annual premium equivalent new business was £4,115bn, an increase of 21.9 per cent from £3,377bn in the first quarter of 2006.
Individual pensions business showed a 35.8 per cent increase from £994m in the first quarter of 2006 to £1,350bn for the same period this year.
ABI director general Stephen Haddrill says: “These figures show that the long-term life and savings market in the UK remains in good health. The A-Day reforms of April 2006, when the pensions tax regime was simplified, led to a significant increase in sales in the second and third quarters of 2006, as expected. It is good news that since that surge, year-on year sales have remained at higher levels than before A-Day.”
But Hargreaves Lansdown head of pensions research Tom McPhail says the figures only give half the story and the ABI must publish data on how much of this business is recycled alongside these new business results.
McPhail says: “It is hard to take its new business announcement seriously when it does not publish its redemptions figures alongside it. It is well recognised that much of the insurance industry’s ‘new business’ is in fact recycled existing business; as a survival strategy, consuming your own body parts smacks of desperation.”
ABI spokesman Jon French says such data is not available at the moment although the trade body is investigating ways of collecting this information as a medium to long term project.
French says: “Whether or not this data is published, the fact that must be acknowledged is of course there is some recycled business but rather than being churned for the sake of it, on the whole it shows the healthy competition in the sector between providers.
“It also shows how adviser firms, such as Hargreaves Lansdown, are giving their clients the best service by ensuring they are in the appropriate investment vehicle.”