Aegon’s UK division has reported a 30 per cent increase in year-on-year underlying pre-tax earnings, from £20m in Q2 2013 to £26m in the same period this year, as the firm prepares for a £25m hit from the pension charge cap.
Earnings from the UK life division were down 9 per cent, from £23m to £21m, while the pensions business reversed a £3m loss in Q2 last year to record a £4m profit in Q2 2014.
However, the firm expects technology expenses to rise in the second half of this year “as most of the projects that are being undertaken reach implementation stage”.
It also anticipates the introduction of a 0.75 per cent charge cap for auto-enrolment in April next year will cost the firm between £20m and £25m a year.
The firm’s platform saw net inflows of £400m during the quarter, bringing total assets to £1.9bn.
Aegon UK chief executive Adrian Grace says: “The company’s earnings are on the right track and are higher than at any point in 2013, we believe the earnings growth reflects the strength our corporate strategy. We are on a mission to get the UK ready for retirement and are helping employers, customers and their advisers to achieve this.
“The full implications of new pension flexibilities are not yet known, but we believe these flexibilities when combined with demographics will have a strong influence on the shape of our industry in the coming years. In the past insurers were focused on helping customers accumulate wealth up to retirement but now the focus is moving to retaining those customers approaching or in retirement.”