Aegon: Lifetime Isa could reverse pensions progress

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Aegon has warned the Lifetime Isa risks “muddying the waters” on retirement savings and could wipe out earlier gains made on encouraging consumers to pay into a pension.

UK chief executive Adrian Grace says over the last couple of years the pensions industry has been driven by coping with regulatory and policy change like auto-enrolment, the charge cap and pension freedoms.

He argues this has been previously been at the detriment of industry-led change, but says 2016 will be the year this will change.

Grace says: “Providers will begin to show their strategic hand as technology increasingly redefines business models in every sector. For pensions and savings, a clear digital strategy is essential.”

But Grace is wary about the Lifetime Isa, announced at the Budget, will sit in the wider pensions market.

He says: “The Lifetime Isa is likely to prove popular in some segments of the savings market. But it also presents risks if poorly positioned as a competitor to workplace pensions, encouraging individuals to opt out and lose valuable employer contributions.

“Muddying the waters between retirement and other forms of savings could reverse achievements in recent years, so we need to be able to explain the merits of each and distinctions between the two, with platforms ideally positioned to facilitate a cross-savings view.”

Grace made his comments as the provider posted its results for the first three months of the year.

Aegon’s UK business has reported pre-tax earnings of £18m for Q1, up from £1.6m at the same time last year.

Platform assets reached £7.4bn as at the end of March, compared with £6.4bn at the end of last year.

Aegon is understood to be in talks to acquire Cofunds, with a deal thought to be imminent.